Multifamily syndication- questions about being a passive investor

[Debbie Hannappel]

When looking at being a individual passive investor in a Multifamily syndication, is it best to become an LLC yourself or stay as a individual investor ?

Does anyone know if as an individual passive investor in Multifamily syndications,  your not married but have a significate other, let say you pass away how does that person become a beneficiary?

Does anyone know a good CPA in the Phoenix/Scottsdale, AZ area that handles these type of investments K1, if the investment is from out of state?

Thanks

[Brian Burke]

@Debbie Hannappel, there's no need to form an LLC to invest in a syndicated offering. Most offerings are structured as LLCs already so your liability is limited to the capital you invested. Some syndicates are structured as Limited Partnerships, but even in that case the limited partner (you) have the same limited liability as you would as an investor in an LLC.

As to survivorship, there are a couple of solutions. One is you designate in your will who your interest is to go to.  The downside is it has to go through probate. Another way is to create a living trust and title your investment in the name of the trust instead of you as an individual. Then in your trust you designate who is to receive your interest in the event of your death. This avoids probate.

Another solution, if the investment sponsor you are working with allows, is you and your significant other can take title together as joint tenants with right of survivorship. In this case, if you die your interest automatically reverts to your joint tenant, and vice versa.  The downside is that if this is all your money your significant other “owns” half of the investment even while you are still living. Maybe this is fine, maybe not.