Tags:

Property Trust, LLC or Quick Deed?
April 4, 2012 6:34 AM   Subscribe

Property transfer from Father to Son. Should we do a simple quick deed, LLC, or set up a trust? One attonrney reccomended the LLC, another said a trust is "safer", what does MeFi think? Thank you!

The benefactors are my brother and myself and we would like the property to be as safe as possible long term from things like creditors/divorce...
For tax purposes, will my brother and I have to pay sales tax even if the property is given to us? Can we avoid this? Thanks again!
posted by 1inabillionmistake to Home & Garden (6 answers total)
 
It sounds like you have two attorneys already. You should ask them to explain the reasoning behind their recommendations, in sufficient detail to enable you to make your decision. Keep asking questions until you are satisfied.

A bunch of strangers on the internet, even the ones who happen to be attorneys, are not going to give you better advice than an attorney who understands the details of your situation and the laws that apply to it.
posted by gauche at 6:40 AM on April 4, 2012 [5 favorites]


This varies state to state and your best advice will come from a competent estate planning attorney in your area.

If you know a lawyer, you can ask him/her for a referral; if not, the state bar association usually has lists or referral numbers (like this one).
posted by jquinby at 6:40 AM on April 4, 2012


gauche has the right idea. (ironic?)

I would encourage you to think about how you presented this to each of them. Depending on the buzzwords that you might have used, you may have indicated certain issues to one or the other, but not both. For example, did you mention the concerns about creditors and divorce to both of them? Did you ask them about the tax consequences of each option?

If your attorney didn't fully explain their reasoning to your satisfaction, then you should look for another attorney, plain and simple.

Because these things vary from state-to-state and from country-to-country, we can't even possibly hazard a guess as to which would be most appropriate for you. I'm sure we could all give you a basic run-down of the entities you're considering and their benefits and drawbacks... but that would be doing you a disservice because it would necessarily be incomplete information and would not be based on a full understanding of your situation.

Just call your lawyers back, tell them that you appreciate their initial opinion, but that you'd really like them to show their work (ie, explain why they made the suggestion they did). Don't be afraid to say "Attorney X suggested this instead, what do you have to say about that?"
posted by jph at 7:01 AM on April 4, 2012 [1 favorite]


On the issue of tax, there are a lot of local-specific laws.

The gifter may or may not owe estate taxes when they die. The receivers will probably get the gifters cost-basis, which means when it comes time to sell, the taxable gain will be much larger.

That said, the common answer is: It is far better to inherit property than to be gifted it.
posted by k5.user at 7:07 AM on April 4, 2012


gauche has it. You already have legal counsel. A bunch of random strangers who don't know the facts won't be able to help you better than they can.
posted by valkyryn at 7:32 AM on April 4, 2012


As gauche says, listen to your lawyers, they know more about the specifics of your situation than we do. Particularly questions like this: For tax purposes, will my brother and I have to pay sales tax even if the property is given to us? Can we avoid this? This is a technical consideration in your choice of vehicle. Your council should be able to answer that in detail and to lay out the options for you. This is exactly the sort of question you need to put to them.

However, lawyers can't and shouldn't be making the decision for you. Lawyers advise, but they don't know your priorities, like comfort with risk or the levels of trust between the parties. Just like any complex decision, you need to balance positives and negatives for each option, then chose the one that works for you and your brother and your parents.

I'd encourage you to make lists of benefits and drawbacks for the options you have. Engage your lawyers to help fill in those lists, that's what they're good for. Make another list of your priorities: risk tolerance, flexibility, ease of managing long-term arrangements, tax obligations, out of pocket costs, and so on. Definitely ask for second opinions on options from both sets of council, if possible. Lawyers come with their own sets of opinions and biases which you will need to tease out.

Compare your lists of priorities with the plus and minus lists for each of the options you want to consider. It's can be a very analytical process, but don't be afraid to put family and emotional factors in there too. Particularly when you are sharing decisions with other people, your family, it can be very helpful to have a common understanding on paper.

So listen to your lawyers, absolutely, but also give yourself some tools to look and their advice and pick the option that best fits your and your family's needs and priorities. It should be your decision, not pushed on to you by an adviser. Ultimately, you are the people living with the arrangement in the long term, not your council.
posted by bonehead at 11:39 AM on April 4, 2012


« Older Can anyone read this dress lab...   |  Why is folder copying on my Wi... Newer »
This thread is closed to new comments.