(612) 206-3701 info@lucerelegal.com

Make Sure Your Real Estate Doesn’t Do You Harm

Fire, tornado, earthquake–if you are the owner of investment real estate, chances are you have already protected yourself against the monetary impact of any natural disaster. However, too many Americans remain unaware of the cost risks of lawsuits and probate court until they and their family must suffer the consequences.

If you own rental properties, you probably already know that certain tenants can be a natural disaster in and of themselves! While a particularly unkempt and unreliable tenant can be a tiresome burden, the threat posed by a lawsuit from a tenant can be dramatically worse.

Even if you don’t rent out a home, cabin, or lake home and have complete control over all your properties, here’s one unfortunate thought to consider: your eventual death may result in stormy courtroom proceedings between the people you love over rights to your real estate investments.

Don’t fret–there are two great precautions you can take. These two common estate planning tools are essential for real estate asset protection:

  • LLC (Limited Liability Corporation) Many individual property owners don’t even think to consider incorporation, but it can prove invaluable for any income-producing property. By placing the properties in control of the company, your personal assets are afforded significant protection and, an added bonus, an extra degree of privacy (the listing is in the company’s name, not your own). Once established, maintenance of the LLC will need to be be done properly at risk of losing these protections, but the steps are not particularly difficult–especially with the help of an experienced business lawyer.
  • Trusts If you only rarely or never rent out your property, a trust is most likely the better-fitted choice. A number of different trusts exist, but two have particular benefit to property owners: the Qualified Personal Residence Trust (QRPT) and the revocable trust.

The QRPT is irrevocable, leaving it inalterable without the consent of its named beneficiaries. A QRPT typically sets a fixed period in which the owner will use the property, before passing it on to his or her heirs. If you fear your estate may exceed the exemptions set by the estate tax–$3 million in Minnesota–this is a popular way to reduce the size of your estate prior to death.

If you need some more flexibility, go with a revocable trust. A revocable trust can be changed at any time and does not require the consent of the named beneficiaries.  Beyond simply having control over where your assets end up after your death, a revocable trust will keep your assets away from the courtroom–and thus off public record. You control the assets while you live, and after you die, control remains entirely within the hands of the people you choose.

Best of all is that you can set up both LLCs and trusts to protect your real estate assets as the specific property warrants. Depending on your individual circumstances and wishes, we can help you craft a plan that will suit you and your loved ones perfectly.

Call our office today at 612-206-3701 or reach out via our online contact form to schedule a time for us to sit down and talk about this in a real estate & estate planning consultation session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

Image Courtesy of hywards | FreeDigitalPhotos.net

Contact us to see how we can help you with Asset Protection for Estates

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The plain-English guide for Minnesota small business owners

When it comes to business, ignorance isn't bliss; ignorance is risk.

There's a handful of legal topics that business owners should be familiar with, at least on a rudimentary level, to reduce the risk of having something horrible come out of left field.

This book is a legal guide to help you put the most common business legal issues on your radar, with enough information for you to be on the alert for when you may need to get some professional advice.

The intention in arming you with this information is so that you can proceed in business confidently and with fewer legal quagmires.

Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

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