Nuances around Estate Planning with Asset Protection

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Nuances around Estate Planning with Asset Protection

Nitish Paliwal
Member since 2023 · 14 posts · 4 votes

Hi BP Community,

I have a rental property which is currently under my name. I want to transfer it to an LLC for asset protection reasons. At the same time, I am setting up a living trust for estate planning so that this property can be passed on to my hiers without any difficulty. My attorney has advised me a structure where:

I own the Living Trust --> Living Trust owns the LLC --> LLC owns the property (Title)

My lender is not okay with this 'Nesting' arrangement. They are okay if I transfer the title to the property to an LLC where I am the LLC's owner, or to a Living Trust where I am the owner. They are NOT okay with a Living Trust owning the LLC.

Has anyone run into this issue, and do you have a workaround (if any)? I am in Texas, and the property is out of the state (Oregon) if it matters.

Thanks! 

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Nitish Paliwal:

Hi BP Community,

I have a rental property which is currently under my name. I want to transfer it to an LLC for asset protection reasons. At the same time, I am setting up a living trust for estate planning so that this property can be passed on to my hiers without any difficulty. My attorney has advised me a structure where:

I own the Living Trust --> Living Trust owns the LLC --> LLC owns the property (Title)

My lender is not okay with this 'Nesting' arrangement. They are okay if I transfer the title to the property to an LLC where I am the LLC's owner, or to a Living Trust where I am the owner. They are NOT okay with a Living Trust owning the LLC.

Has anyone run into this issue, and do you have a workaround (if any)? I am in Texas, and the property is out of the state (Oregon) if it matters.

Thanks! 

 We transfered ours to our living trust directly - not worried about asset protection honestly because we have insurance and a property manager. What are we going to get sued for? 

I have had attorneys easily show me how to pierce corporate vail by transferring to an LLC without it being arms length transaction especially if you personally are on the loan. Of course its never tested because it is so rare for a lawsuit to happen that is not covered by insurance.

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  • Jonathan Bock
    Accountant · Bryn Mawr, PA · Member since 2023 · 409 posts · 321 votes
    2y

    @Nitish Paliwal

    Give us some color on the loan and the property ?

    EP is very nuanced indeed....

    Is this an "Asset Protection" attorney??  

    0Reply
  • Nitish Paliwal
    OP
    Member since 2023 · 14 posts · 4 votes
    2y
    Quote from @Jonathan Bock:

    @Nitish Paliwal

    Give us some color on the loan and the property ?

    EP is very nuanced indeed....

    Is this an "Asset Protection" attorney??  

    Hey Jonathan,

    It's a 30y conventional loan for a SFH.

    The attorney specializes in estate planning, but has quite a bit of experience dealing with such situations. And, I have actually heard about such a structure from at least two other sources. So, not sure if it's just my lender who's opposed to Nesting, or if it's a common theme. 




    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Nitish Paliwal:

    Hi BP Community,

    I have a rental property which is currently under my name. I want to transfer it to an LLC for asset protection reasons. At the same time, I am setting up a living trust for estate planning so that this property can be passed on to my hiers without any difficulty. My attorney has advised me a structure where:

    I own the Living Trust --> Living Trust owns the LLC --> LLC owns the property (Title)

    My lender is not okay with this 'Nesting' arrangement. They are okay if I transfer the title to the property to an LLC where I am the LLC's owner, or to a Living Trust where I am the owner. They are NOT okay with a Living Trust owning the LLC.

    Has anyone run into this issue, and do you have a workaround (if any)? I am in Texas, and the property is out of the state (Oregon) if it matters.

    Thanks! 

     We transfered ours to our living trust directly - not worried about asset protection honestly because we have insurance and a property manager. What are we going to get sued for? 

    I have had attorneys easily show me how to pierce corporate vail by transferring to an LLC without it being arms length transaction especially if you personally are on the loan. Of course its never tested because it is so rare for a lawsuit to happen that is not covered by insurance.

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Calbeny Willfred
    Member since 2026 · 15 posts · 3 votes
    1mo

    Looking at this topic a couple of years later, the gap between asset protection and succession is still where most landlords stumble. An LLC protects your equity from active tenant liability, but it does nothing to prevent probate from locking down business operations once you're gone. When managing multiple properties in Texas, I brought in Houston estate planning attorney Troy Moore to integrate my LLC membership interests directly into a private trust framework. Connecting both sides upfront is really the only way to keep cash flow and title out of the court system.

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