Hudkins May 28th, 2018
Estate Planning and Vacations Homes: When to Consider an LLC
Protect Your Property and Obtain Peace of Mind: Using LLC’s for Vacation Homes
Whether you spend your summers at the boardwalk on Hampton Beach or boating on Lake Sunapee, it is critical to carefully consider the best way to handle your vacation property when crafting your estate plan. Without proper planning, you may exposes yourself to liability or unintentionally create a probate issue after you pass away. Many people make the mistake of assuming that the only thing to be done with this type of asset is to place it in into a trust. Trusts are wonderful tools to help us avoid probate. Unfortunately, without giving up a measure of control over the asset, they typically do not provide liability protection. For some homeowners, holding a second property in a limited liability company may be a valuable addition to an overall estate plan.
5 Situations Where an LLC is Worth Considering For Your Vacation Home
When should you consider putting your real estate into an LLC? The following are five examples:
- You are concerned about personal exposure to lawsuits involving the vacation home property. For example, you may be worried about a renter injuring himself while at the property and filing suit against you for damages. Ideally, holding the property in an LLC will limit your potential exposure to only the assets held inside the LLC, and not everything else that you own.
- You have concerns about the general use of the property. The LLC’s operating agreement can be used to dictate certain rules and restrictions surrounding its use.
- You have concerns about how the property will be transferred from one generation to the next. Many families have treasured vacation homes that have been enjoyed for decades. Over time, this could mean that there is more than one owner of the property. An LLC’s operating agreement can be used to address issues surrounding transfer of ownership and management of the property. This can also save valuable time and money by avoiding the need to probate an LLC’s membership interest.
- You have concerns about your loved ones being able to share the property peacefully. Placing the property into an LLC and creating an operating agreement allows you to outline the rules for handling disputes among the owners, define each member’s contribution to the LLC, and address many other potential issues.
- You want an easy to maintain entity to hold title to the vacation property. Unlike corporations, LLC’s are easy to create and require very minimal upkeep! New Hampshire has also made this choice of entity even more enticing by eliminating the transfer tax involved in transferring a home to an LLC in many cases.
Whether you ultimately opt to hold your vacation home in an LLC or a revocable trust, it is important to take action to avoid unnecessary probate proceedings and limit liability exposure. Consult with a knowledgeable estate planning attorney who can help guide you through the decision making process. To learn more, we encourage you to contact us today at (603) 434-1770.
This Blog Post was authored by Candice M. O’Neil an attorney of Hudkins Law since 2011 whose focus has been on estate planning and corporate law.
About Hudkins Law
Hudkins Law was founded in 2006 by Jacqueline M. Hudkins. The firm provides title and settlement services for residential and commercial real estate transactions. Each real estate transaction is managed by a team of Attorneys and Paralegals to guarantee continuous coverage throughout the entire closing process and combines the expertise of Real Estate, Title, Trust, Estate Planning and Corporate Attorneys. The firm employs nine Attorneys and ten paralegals and maintains offices in Windham NH, Concord NH, Hampton, NH, New London, NH, Keene, NH, Norwich VT, & Andover, MA.