When it comes to holding real estate, especially investment properties or multiple properties across different states, many owners feel confused about what type of entity they should use. Holding everything in your individual name may seem simple, but it can create significant risk: if one property becomes involved in a lawsuit or liability claim, your other assets could be exposed. In addition, if you pass away, all properties held under your individual name may need to go through a lengthy and public probate process before transferring to the next generation.
This article outlines three of the most commonly used structures: revocable trust, realty trust, and limited liability company. While irrevocable trusts can provide creditor protection, they require permanently giving up control of the asset and involve complex tax planning, so we are not focusing on them in this article.
