There are a few key differences between placing a property in a trust and holding it in an LLC.
Here are some advantages of each option:
Let me start by stating that we are NOT lawyers, CPAs, or financial advisors. Don't make any decisions on this post prior to consulting with the appropriate service provider. We will be glad to help get you connected with a lawyer if you are wanting to start there. We are real estate agents in Columbia SC
When you place a property in a trust, it does not become part of your probate estate when you die. This means that the property can be transferred to the beneficiaries of the trust without going through the probate process, which can be time-consuming and costly.
The probate process is a matter of public record, which means that anyone can see the details of your estate and how it is being distributed. A trust, on the other hand, is a private document, so the details of the trust and the distribution of the property it holds are not publicly disclosed.
With a trust, you can specify exactly how and when the property should be distributed to the beneficiaries. This can be particularly useful if you have concerns about the beneficiaries being responsible with the property or if you want to provide for beneficiaries who are minors or have special needs.
An LLC is a business structure that can provide liability protection to its owners (called "members"). If the LLC holds a property and that property is sued, the LLC's assets are typically at risk, not the personal assets of the members. This can be a significant advantage if you are concerned about personal liability related to the property.
An LLC can be a flexible way to hold a property. The members of the LLC can decide how the property will be managed and how profits from the property will be distributed. This can be particularly useful if you are co-owning a property with others and want to have a clear understanding of each person's rights and responsibilities.
It's worth noting that trusts and LLCs can be used together. For example, you could place a property in an LLC and then transfer ownership of the LLC to a trust. This can provide the liability protection of an LLC while still allowing the property to be distributed according to the terms of the trust.