Originally posted by K C:
I was wanting to make an LLC, but someone who is a landlord here said to just put the property into a trust because it is cheaper and provides the same protection as an LLC.
False. Most trusts do NOT offer ANY asset protection. If your duplex is owned by a revocable trust (which lists you as the beneficiary) and somebody gets hurt on your property, they will sue YOU. The trust may hide the true owner, YOU, a little, but any good lawyer with a solid case against you will have no problem getting at you personally.
The only trust I know of that does offer solid asset protection is an irrevocable trust, where you basically give away your property to somebody else. But these are definitely NOT cheaper than an LLC. Especially if you're giving up control of your assets.
Then another landlord told me not to bother with LLC or trusts because they only provide a false sense of protection because I can still be sued personally regardless.
You can always be sued personally for something you personally do wrong. The purpose of a limited-liability entity such as an LLC or Corporation is our sue-happy nation goes after the owner(s), not necessarily the wrong-doer. If your duplex is held in an LLC and somebody tries standing on the edge of a wet soapy bathtub to install a shower curtain and falls and breaks something important on their body, they will sue the OWNER, your LLC, not YOU because YOU didn't do anything wrong. Sure, they can still try, but I'm sure the court will have a hard time finding you personally liable unless you told the tenant to stand on a wet soapy bathtub to install a curtain.
I wonder how many people who downplay the protection of an LLC or Corporation know somebody, including themselves, who failed to maintain the entity properly and had it set aside in court? Perhaps this forms the basis for their belief in the inadequate protections of a limited-liability entity.