Renting Underwater Property and Liability

[Keith A.]

I have a situation where I need to rent my fathers property that is currently underwater. He needs to move due to medical reasons. It looks like we can get enought to almost break even.

My question is, is it a good strategy to put this property in an LLC to protect him? He has a sizable nest egg and woudl not want something to happen to it due to a tenant suit from this property.

Also, are there any circumstances where the lender would call the note by doing this?

Thanks!

[Account Closed]

Keith: regardless of your plan to rent the property, now would be a good time to consult with an attorney regarding estate planning. If your father's estate consisted only of the underwater house, your father or his heirs could could walk away from it and let the bank foreclose to get it back. You mention you are buying another house? Are you buying it or is your father buying it? Does he have other assets or income? Now is the time to consult with an estate attorney about what his assets are, what he wants to happen to them, and how they should be held. There are many considerations, including planning for continued medical costs/insurance. Get yourself to a recommended attorney that specializes in estate planning. Don't rely on a general attorney. Estate planning, especially for seniors, is specialized.