Estate planning: Trust or Will with rental properties

[Tanya F.]

Just curious what a typical mom-and-pop landlord out there goes for when it comes to estate planning. We don't have an LLC and don't plan to. I've seen older threads here entitled "Trust or LLC", but not "trust or will". So which do you choose, BP'ers?

We are setting up a trust right now.

We currently have two buildings we rent out (a total of 5 units between them), and we're close to 60 years old.  Maybe we'll get another property in the future, we don't know. We're also unsure how long we plan to keep the rentals during retirement, but likely at least another decade. A trust will allow the rentals to keep going should we become incapacitated for any reason, or after our death. If anyone knows of an estate planning forum where this has been discussed, please respond with a link. I'm more curious what the average member of this community has chosen.

[Ashish Acharya]

Originally posted by @Tanya F.:

Just curious what a typical mom-and-pop landlord out there goes for when it comes to estate planning. We don't have an LLC and don't plan to. I've seen older threads here entitled "Trust or LLC", but not "trust or will". So which do you choose, BP'ers?

We are setting up a trust right now.

We currently have two buildings we rent out (a total of 5 units between them), and we're close to 60 years old.  Maybe we'll get another property in the future, we don't know. We're also unsure how long we plan to keep the rentals during retirement, but likely at least another decade. A trust will allow the rentals to keep going should we become incapacitated for any reason, or after our death. If anyone knows of an estate planning forum where this has been discussed, please respond with a link. I'm more curious what the average member of this community has chosen.

 Trusts are good for many reasons but not only for if you become incapable. 

There are other estate planning documents that are actually directed to your disability and stuff. 

Trust will avoid probate and is beneficial especially if real estate is in another state. But same benefits can be achieved with correct kind of titling. Trust is absolutely not necessary. 

Trust comes in handy when you are trying to split the interest of the property. Such as when Income goes to surviving spouse and property to the children when surviving spouse is dead. Or you are scared survive spouse is going to remarry and not give anything to your childerns. 

You might have specific requirement that might actually require the Trust. May be you have more than 22M in net worth and you are trying to lock in the appreciation in the Trust so that you do not have to pay estate taxes when you pass away.  Did you have a conversation with the professional?