What happens with your assets if you die tomorrow?

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What happens with your assets if you die tomorrow?

Mary Jay
Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes

God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

What asset protection/transfer to your kids do you guys have in place or planning to do?

I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

Now, those properties that are not paid off

3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

Thank you guys

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y

Go to an attorney ASAP and set up a Trust. Put your properties in the Trust, whether they are in LLCs or not. Designate how you want your personal property to be distributed. Make sure that your Fiance cannot change this and give it all to his family.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

    I also have a trust that owns my LLC's.
    No probate needed. It will just pass to listed beneficiaries.  
    0Reply
  • Mary Jay
    OP
    Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
    3y
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.


     Thank you! Do you have a link on that podcast? I would love to listen to it.

    0Reply
  • Mary Jay
    OP
    Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
    3y
    Quote from @John Underwood:
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

    I also have a trust that owns my LLC's.
    No probate needed. It will just pass to listed beneficiaries.  

    Thank you sir! May I please ask you how its structured? The trust is a member of LLC A? and LLC B? and LLC C?

    And you are a manager of the trust and each LLC?

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Mary Jay:
    Quote from @John Underwood:
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

    I also have a trust that owns my LLC's.
    No probate needed. It will just pass to listed beneficiaries.  

    Thank you sir! May I please ask you how its structured? The trust is a member of LLC A? and LLC B? and LLC C?

    And you are a manager of the trust and each LLC?


    My Trust is the owner of a Master LLC. The Master LLC owns multiple LLC'S.

    These LLC'S own individual properties.

    A LLC under the Master receives all income and pays all bills.

    My attorney and CPA got together to agree on the best way to set this up.

    Yes I am a manager or trustee of everything.

    0Reply
  • Mary Jay
    OP
    Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
    3y
    Quote from @John Underwood:
    Quote from @Mary Jay:
    Quote from @John Underwood:
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

    I also have a trust that owns my LLC's.
    No probate needed. It will just pass to listed beneficiaries.  

    Thank you sir! May I please ask you how its structured? The trust is a member of LLC A? and LLC B? and LLC C?

    And you are a manager of the trust and each LLC?


    My Trust is the owner of a Master LLC. The Master LLC owns multiple LLC'S.

    These LLC'S own individual properties.

    A LLC under the Master receives all income and pays all bills.

    My attorney and CPA got together to agree on the best way to set this up.

    Yes I am a manager or trustee of everything.


     Thank you sir! That is the structure Ive been discussing with my attorney as well. Because I have few LLCs as well..

    When people say: "My trust is the owner of Master LLC" to me its a bit confusing. Do you mean that your trust is the member of MAster LLC? Because there is not such thing as Trust owns an LLC, right? There is: "Trust is a member of an LLC" and that is how it shows that the trust owns that LLC....

    (Forgive me if I am asking stupid questions, its just that is something that is not easy for me to understand.)

    Here is what my attorney said: the trust would be a member of the Master LLC, you would still be the Manager.

    Is your trust also a member of the Master LLC?

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Mary Jay:
    Quote from @John Underwood:
    Quote from @Mary Jay:
    Quote from @John Underwood:
    Quote from @Chris Seveney:
    Quote from @Mary Jay:

    God forbid, and something like a car crash happens... We all hope it never happens,  but no one can predict that we will live forever. 

    What asset protection/transfer to your kids do you guys have in place or planning to do?

    I think we should make a distinction between properties that are paid off vs properties that still have a mortgage on them.

    I was thinking for the properties that are paid off to open an LLC with my kid (I only have one child who is in college) and deed those properties into that LLC.

    1) Question: lets say my son gets married, and then God forbid gets divorced, the LLC should not be affected by the divorce, right?

    Also, I was thinking of opening a joint account with my son so he could transfer tenants payments to that account 

    2) Trusts. Some people open trusts. Some open revocable, some irrevocable. What do you guys think? Dont know much about this technique

    Now, those properties that are not paid off

    3) Do they go back to the bank? Is there some kind of mechanism so my adult son could transfer them into his name? Some of my properties have a lot of equity...Would be sad to lose that equity

    Thank you guys


    we have a revocable trust that the LLC is owned by the trust but managed by me. I did a podcast episode several years back about this.

    I also have a trust that owns my LLC's.
    No probate needed. It will just pass to listed beneficiaries.  

    Thank you sir! May I please ask you how its structured? The trust is a member of LLC A? and LLC B? and LLC C?

    And you are a manager of the trust and each LLC?


    My Trust is the owner of a Master LLC. The Master LLC owns multiple LLC'S.

    These LLC'S own individual properties.

    A LLC under the Master receives all income and pays all bills.

    My attorney and CPA got together to agree on the best way to set this up.

    Yes I am a manager or trustee of everything.


     Thank you sir! That is the structure Ive been discussing with my attorney as well. Because I have few LLCs as well..

    When people say: "My trust is the owner of Master LLC" to me its a bit confusing. Do you mean that your trust is the member of MAster LLC? Because there is not such thing as Trust owns an LLC, right? There is: "Trust is a member of an LLC" and that is how it shows that the trust owns that LLC....

    (Forgive me if I am asking stupid questions, its just that is something that is not easy for me to understand.)

    Here is what my attorney said: the trust would be a member of the Master LLC, you would still be the Manager.

    Is your trust also a member of the Master LLC?

    Your trust has a trustee and beneficiary.
    The trustee is public record, the beneficiary is not.
    If you want to hide the ownership you get someone else to be the trustee such as an attorney, banker or someone else you trust. 
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    Go to an attorney ASAP and set up a Trust. Put your properties in the Trust, whether they are in LLCs or not. Designate how you want your personal property to be distributed. Make sure that your Fiance cannot change this and give it all to his family.

    1Reply
  • John T.
    Rental Property Investor · Central U. S. A. · Member since 2013 · 296 posts · 149 votes
    3y

    Schedule an appointment with an attorney licensed to practice law in your State and who specializes in Wills, Trusts and Estates.  The attorney will gather all pertinent information from you and give you his opinion as to the manner in which your estate should be administered and distributed after your death.  You may also wish to discuss the advisability of a prenuptial Agreement with your Fiancé.  

    0Reply
  • Jason Marino
    Attorney · Member since 2022 · 160 posts · 186 votes
    3y

    Hi Mary,

    As stated in several of the posts above, a good way of avoiding the confusion that can happen at death with assets is to create a Living Trust. This is a revocable Trust that can own the assets directly or can have a membership interest in an LLC that owns the property. The first option will not offer asset protection, but would be useful in creating an organized Estate Plan. The second option would offer both asset protection and Estate Planning. Another advantage to a Living Trust is that it can help to avoid probate. Probate is a public process that can be time consuming and costly.

    0Reply
  • Mary Jay
    OP
    Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
    3y
    Quote from @Jason Marino:

    Hi Mary,

    As stated in several of the posts above, a good way of avoiding the confusion that can happen at death with assets is to create a Living Trust. This is a revocable Trust that can own the assets directly or can have a membership interest in an LLC that owns the property. The first option will not offer asset protection, but would be useful in creating an organized Estate Plan. The second option would offer both asset protection and Estate Planning. Another advantage to a Living Trust is that it can help to avoid probate. Probate is a public process that can be time consuming and costly.


    Thank you so much! After you explained it it makes way more sense! So I want my properties be owned by different LLC's. One property per one LLC. Then I will have a master LLC that is is over all those little LLC's, then this Master LLC is a member (or manager ) of other little LLC, right? And then that Master LLC is the member of the Trust? Is that the correct way?

    You seem like you know that subject well so thank you so much for helping! 

    0Reply
  • Mary Jay
    OP
    Glendale, AZ · Member since 2017 · 1k+ posts · 236 votes
    3y
    Quote from @Bruce Woodruff:

    Go to an attorney ASAP and set up a Trust. Put your properties in the Trust, whether they are in LLCs or not. Designate how you want your personal property to be distributed. Make sure that your Fiance cannot change this and give it all to his family.


    I already went to an attorney.Now I am trying to understand if what that attorney told me is the correct way. Ive had situation before with a land trust when an attorney made a mistake and opened a wrong trust. On this forum attorneys usually know much more than regular attorneys. So I am trying to get an understanding. By the way, there is no such thing as "trust owns an LLC" as far as I undesrtand. A trust can be a member of an LLC... So you may want to check your structure as well. Hopefully Jason will clarify it for us, he sounds like a pro in that area

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    I didn't say "a trust owns an LLC", but I have put LLCs in a trust before. There must be some difference. It was on the advice of a Corporate Atty who was very highly rated. And it was in CA so maybe that's different?

    Just get a trust going ASAP.

    0Reply
  • Jason Marino
    Attorney · Member since 2022 · 160 posts · 186 votes
    3y

    Hi Mary,

    What you are speaking about is called a Hub and spoke model. It is a commonly used structure used for asset protection. The master LLC is the Hub, and it usually controls and owns the spoke LLCs. The spoke LLCs each own a property or an asset. Many investors will have their Hub LLC connected to a Living Trust. Whenever another spoke LLC is added, it will be connected to the Hub LLC and through the Hub LLC to the Living Trust. This makes the Living Trust the top of the structure. A revocable Trust can usually be a Manager and a Member of an LLC. Through this, it can have control of an LLC as its Manager and own the LLC as its Member. I think that the confusion comes up from different words that have similar or the same meaning.

    1Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 583 posts · 738 votes
    3y

    This is a great thread and good to rehash now an again as case laws evolve.

    A trust is an awsome tool. The LLCs are good. However, I think that some people take it too far with the multiple LLCs and anonymity and such. Then again, there are many out there that may have dozens of assets, each with globs of equity or value. Not me.

    For me, a trust, and 2 LLCs. I may expand to 3 LLCs in the distant future. For context, im a very small time investor just getting into the game. I am still learning as I go and may change everything later. There are only 5 properties, about $10M, at 60% leveraged. There are insurances and an umbrella policy. One of the LLCs is used as a management company.

    My kids are young, all under 15 yrs old, and fantastic... for now. Even if I die tomorrow, my kids will not inherit until they are 30yrs old. At that point, they get about 25% distribution. Then another 25% at 35 yrs old, and the remainder at 40 yrs old. There are annual drug testing and other HEMS written in.

    There are college provisions and business provisions.

    I also write in disinheritance guidelines as well. There are protocols for discretionary distribution so that a divorce or other potentially costly issue will not drain the trust.

    I have slowed down to spend alot of time with family and raise the kids. However, I anticipate growing the assets to at least $50M within the next 20 years. As such, I may change things. Just as children change and become individuals. I want them to stand on their own and capable of protecting these gifts and growing the foundation. I will do my best so they do not inherit all at once and blow it based on age/imaturity.

    There is no right or wrong, but the trust is important if you want to avoid probate. I have seen other trusts that work for other family dinamics. Do some research and make your edits. Some people tell me not to control so much of it because I'll be dead. Just remember, you can always change it later, just get the trust done asap.

    0Reply
  • Ghenia Flewellyn
    Investor · Fort Lauderdale, FL · Member since 2015 · 83 posts · 51 votes
    3y

    @Chris Seveney Where can we access the Podcast?

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Ghenia Flewellyn

    https://podcasts.apple.com/us/podcast/good-deeds-note-investing-podcast/id1442697566?i=1000493148636

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    3y

    The flow of your assets will depend on whether the assets are discussed in your will or are held within a trust.

    The benefit of having a trust is that the trustee will distribute the assets based on the trust agreement and normally escape probate.

    Best to talk to an attorney.

    [email protected]917-280-8544
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  • Bob Floss II
    Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
    3y
    Why on earth would you spend your life accumulating assets and not spend the money to go sit with a good estate planning attorney?? All of these issues can be easily addressed. If you die without having a Will and Trust in place, you are just going to make a Probate attorney very wealthy after you are gone.
    0Reply
  • Ramandeep Sidhu
    Rental Property Investor · San Jose, CA · Member since 2020 · 75 posts · 44 votes
    3y

    If something were to happen to you and you passed away tomorrow, it's important to have a plan in place for transferring your assets to your children. One option is setting up an LLC and transferring your paid-off properties to it. This can provide protection for those assets and help ensure that they are passed on to your children. Another option is setting up a joint account with your son where he can manage the financial aspects of the properties. Trusts are also a possibility, but they can be complex and it's important to understand the different types before deciding which one is right for you. If you have any properties that aren't paid off, they may be sold or foreclosed on to pay off the mortgage. However, if you have enough equity built up in them, you may be able to transfer ownership to your son. It's always a good idea to consult with a legal professional to understand your options and make sure any transfer of ownership is done correctly.

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