Transferring Property to a Revocable Land Trust As Personal Liability Shield

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Transferring Property to a Revocable Land Trust As Personal Liability Shield

Julius VincentBusiness Member
Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes

I have a client who is on the verge of purchasing his first property, an out-of-town LTR. The property will be in his name, but he's wondering if transferring it to a revocable land trust, then having the trust lease out the property to his LLC would help him avoid personal liability (bank will not let him transfer directly to his LLC because of the due-on-sale clause).

I suspect this wouldn't preclude personal liability since the property wouldn't be held directly by an LLC but would love to get an attorney's brief thoughts.

[email protected]281-407-7353
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Julius Vincent:

I have a client who is on the verge of purchasing his first property, an out-of-town LTR. The property will be in his name, but he's wondering if transferring it to a revocable land trust, then having the trust lease out the property to his LLC would help him avoid personal liability (bank will not let him transfer directly to his LLC because of the due-on-sale clause).

I suspect this wouldn't preclude personal liability since the property wouldn't be held directly by an LLC but would love to get an attorney's brief thoughts.

OVERKILL. Ask your client what are they concerned about being sued for that would not be covered by insurance?

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    1y

    The real problem is the client is 100X more likely to do something personally that gets the, sued and they lose the property, than the property itself is. Secondly, what could happen at the property that isn't also the client's fault? Tree falls and kills person, it should have been trimmed. Who's responsible? The client and the LLC. So they both get sued.

    It's been asked her 100+ times to the general BP audience. With 1,000's (10,000's?) of members owning 10's of thousands (100's of thousands?) of SFR and small multi. Has any one EVER been saved by an LLC in the case of a lawsuit where insurance didn't cover the loss. No one, not one, has ever come forward with their case.

    Buy an umbrella policy for a few hundred $’s that you need anyway, and save the expenses and time suck of the entities. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Julius Vincent:

    I have a client who is on the verge of purchasing his first property, an out-of-town LTR. The property will be in his name, but he's wondering if transferring it to a revocable land trust, then having the trust lease out the property to his LLC would help him avoid personal liability (bank will not let him transfer directly to his LLC because of the due-on-sale clause).

    I suspect this wouldn't preclude personal liability since the property wouldn't be held directly by an LLC but would love to get an attorney's brief thoughts.

    OVERKILL. Ask your client what are they concerned about being sued for that would not be covered by insurance?

    7e investments53 Reviews
    WebsiteView Page
    3Reply
  • Julius VincentBusiness Member
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    Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes
    1y

    Thanks, @Bill B. & @Chris Seveney!

    It sounds like he should just get a really good umbrella policy in lieu of creative entity structuring. Appreciate your thoughts.

    [email protected]281-407-7353
    Horizon Wealth & Tax Advisors510 Reviews
    WebsiteView Page
    2Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    1y

    I'm not an attorney thank god, but if it's revocable, it's up for grabs.

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