SHOCKING WAYS HOUSE MAINTENANCE WILL HELP YOU SLEEP BETTER AT NIGHT.
Buying a home takes a strong stomach: you risk real peril.
I am a hands-on guy that loves to solve problems. And I love projects. I especially love house projects, but only when the project is completed. Otherwise I hate them.
They worry and exhaust me.
Understand, I live in an old house, Built in 1922. It had been ”fixed up” when we bought it. This apparently just meant that stuff hadn’t broken yet that was hastily installed a few years earlier. Well, it has now been a few years since we bought it, and things need attention all over.
Paint is peeling off the soffits. One of the GFCI electrical outlets repeatedly pops into breaker mode unnecessarily, demanding replacement. The stairs to the basement wiggle, and I crack my head on the ceiling each time I come down them without ducking. The beautiful wood floors are not so beautiful. I could go on and on….
Just yesterday, we got a letter in the mail that we are possible plaintiffs in a mold damage class action lawsuit against the window manufacturer whose brand of window had been used to replace the original 1922 windows 6 years ago. Oh Joy!
And so we have lots of projects that either need to happen or have sort of already half started.
This means that our house is a rich embarrassment of unfinished repairs.
Now, the garage cottage is another story.
We have a rental unit property, a quaint little cottage on the second story of the garage. We recently fixed it up really nicely in between tenants. It’s beautiful. The result of tons of work. It is four stars, no doubt. A gem of a property.
Which made me realize, we needed to give some serious thought to protecting this valuable asset. So I made it my project to write about….
How to Protect Your Real Estate Assets
If you own real estate, chances are you have purchased insurance to protect your assets against damage or loss. But most of us have not taken the necessary steps to protect the home against lawsuits or probate?
If you own rental properties, the fear about being sued by one of your tenants may keep you up at night. And if it isn’t, it probably should be. It happens.
And while it may be unpleasant to think about, there is always a chance your death could foment a family feud over your home, vacation home, or other real estate investments.
Two common estate planning tools for real estate asset protection include limited liability companies (LLCs) and trusts:
LLC. If you have income-producing property, then an LLC probably makes sense for you, since it protects your personal assets from lawsuits or claims that result from your ownership of the real estate. LLCs may also offer owners privacy since the property can be listed in a company name, not in your name directly. However, you must be sure you maintain the LLC properly so the planned for protections remain intact. It’s not too difficult though, especially with counsel.
Trusts. If you own vacation home property that you do not rent out on a regular basis, then a trust may be an option worth considering. While there are a variety of creative trust vehicles, the most common is called a revocable trust (which can be changed without consent of the beneficiaries). This is a flexible tool, and, if you choose the right kind, it can last for multiple generations. The major benefit of the revocable trust, besides control of what happens to the assets after the death of the grantors, is that it can protect your assets from court oversight after your death, and keep control over that property within the control of your family.
You could also use LLCs and trusts together in combination to protect real estate assets if you have both primary residential and rental properties.
The ownership of real property is inherently dangerous (exhausting, expensive) stuff, and we certainly do not advise you to make any changes on your own. A lawyer can help you decide on the best course of action for you.
Call our office or schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify and enact the best ways for you to protect and provide for your family.