The problem with owning your rental house or apartment or even your business property in your own name is that you could have great liability to someone if they get hurt on your property. If a tenant in your rental house falls in the bathtub or down the stairs, you could potentially receive a disastrous Court judgment against you. One that could be used to force you to sell your own house to pay the large Court judgment.
Obviously, you’ll want to have insurance to protect in the event of a lawsuit, but you also don’t want to own the rental property in your own name. It should be held by an entity, such as a Limited Liability Company (LLC) or a Corporation. Make sure that all of the proper formalities are used to set up and maintain those business entities or they may be worthless to protect your personal assets in the event of a lawsuit. Therefore, you want to have your rental house or your business property owned by a properly prepared and maintained entity, and then your entity should be held by your Living Trust, so that it skips Probate Court upon your mental disability or death.
Tags: estate planning, Financial, liability