Nuances around Estate Planning with Asset Protection

[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! 

[Chris Seveney]

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.