I am in my seventies and own 14 rental properties that are deeded to my LLC in Georgia. From my research, it looks like I just need to have the stipulation in my Operating Agreement (It’s a single-member) that upon my death, my descendants (named in the clause) will become the new owner/members of the LLC, and that this can then avoid probate while also allowing a stepped-up basis in the real estate for my children. Can anyone verify this for me? Much appreciated.
You need to hire a reputable estate attorney licensed to practice in your state and follow their advice.
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I cant provide legal advice obviously…but that is how my LLCs are setup in Georgia as well for my rental properties. In your case, the tax classification will change from a Single Member to a Partnership. Thats pretty easy to do but will require a form submitted to the GA SOS.
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It’s encouraging to hear that this route MAY work without involving high priced lawyers. Many states (50%) allow POD deeds (payable-on death), but GA does not. That tells me that the legal lobby is too strong in Georgia, extremely limiting the options for inheritance to avoid probate, leading people to expensive TRUSTS. This is separate from my questions about my LLC, but is very relevant to estate planning of my own home, etc.
Directing the management of the LLC after your death might get tricky. With the value that 14 rental properties brings to the table it would appear to me that a little legal eyewash would be appropriate.
You’re probably correct. Both children are well-established professionals and have pretty substantial estates on their own and would actually prefer that I liquidate these properties before I pass. Options, but I am undecided at this point.
I know you didnt ask the question @wahoo but I am not a fan of having all 14 of your properties in the same LLC. You have enough properties to where you should investigate a more complex structure for legal protection. Also, if you are managing your own properties, there are further actions you ight want to take to isolate liability.
Unfortunately, we live in a litigious society where wealth is viewed as evil by certain envious segments of the population. You just have to look at it as a success tax…
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I got put into an LLC with other beneficiaries which was disastrous. Had to go get a lawyer to get me out. Not all of beneficiaries will think it’s a good idea.
Obviously I’m not going to spell out exact details. Of course your situation may not be like mine for sure.
I’m just letting you know my experience.
I don’t disagree that having all fourteen properties in the name of one LLC may be a bit much. I never pre-thought it or had that original intention. I was working full time, living well below my means, and pouring any extra cash flow into buying more properties, and it just sort of happened.