# Putting land in an LLC or Trust?



## lmholmes11 (Nov 12, 2008)

Hello everyone. I own a house with 10 acres and 40 acres of hunting property so far. However I want to make owning land part of my investment strategy. (Horrible time to start that, I know). 

When looking for land, I often see people put land in an LLC, or trust. What are the benefits of both? Thanks! 

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## Luv2hunteup (Mar 22, 2003)

Putting land in a trust protects it from probate plus ensures your wishes are followed upon your demise. You can control it from your grave depending on what your wishes are. There are other benefits too.


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## Fishndude (Feb 22, 2003)

Putting property into an LLC will usually trigger a Due On Sale clause, if there is a mortgage attached to the property. My home, and Second Home are in a Trust we set up.


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## 6Speed (Mar 8, 2013)

Trust...I'd use an attorney to set this up and not the internet. I haven't experienced it yet but turning over in your grave is probably tuff if you made a bad decision. You'll be glad you did.


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## C20chris (Dec 4, 2007)

I am by no means an attorney or tax accountant, but I can't imagine putting it in an LLC has a benefit unless your intentions were to lease the property out for hunting or other income streams (timber sale, farming, division ect.). Maybe, if you had a current LLC and were looking for a way to deflect some of that income you would wrap up a hunting property into a rental business (or other business for that matter). A separate LLC for an individual hunting property wouldn't make much sense to me.


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## usedtobeayooper (Feb 13, 2008)

From my limited knowledge on the subject, I believe the primary advantage of putting income property into an LLC is to protect against liabilities by differentiating the property from your personal assets. LLC’s require an annual fee to maintain them. While I think it’s minimal, it’s still probably a couple hundred bucks a year.

A trust (and associated Will) on the other hand, is used primarily to keep it out of probate as mentioned above, by directly transferring it to your chosen heir(s) upon your death. This can also help avoid the need for them to pay (or at least substantially reduce) taxes if granting it to an immediate family member. One time set-up fee unless you make changes to it later. My home and both properties that I have are set-up in lady-bird deeds that my Will then directs into the Trust upon my (and my wife’s) death. …or something like that. Again, not an expert on the subject, and it was a while ago that I set it up… but I think my explanation is fairly close.

I’d sit down with an attorney familiar with this stuff and go over your own personal scenario.


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## fishmark (Jan 1, 2010)

LLCs are still only 35.00 per year. Other than the fees for setting up the LLC initially.


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## shaffe48b (Oct 22, 2019)

I looked into putting a rental property into an llc for liability purposes but it was under a mortgage with my name. The banker seemed to suggest nothing would probably happen but I didn't want to take the chances.

If you tried buying a property as a llc it's unlikely you would enjoy the same privileges as a personal buyer especially with a residential property. Also you probably have extended credit history as a person but you would have none starting out as a llc. I'm not sure what of your income or assets could even be considered since the whole point is to protect your personal assets in llc.


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## shanny28757 (Feb 11, 2006)

If you own multiple properties and set up each one into LLCs you can mitigate liability in case anyone comes after you with a lawsuit. If they sue you because of something that happened at XYZ property, the most they can get from you is whatever is assets are attached to that particular LLC.

in practice it’s more difficult than that because to operate this strategY by the letter of the maw you need totally separate accounts and accounting. This means no comingled funds. You can’t just have a single checking or savings account that you deposit income into and pay bills with. It gets hard to operate for a small side business because of all the paperwork and bookkeeping.

another point to note is that you can’t necessarily just put your existing property into an LLC if you don’t own it free and clear. The bank may either not allow it or exercise an acceleration on your note.

Probably worth talking to a CPA that specializes in real estate and/or an estate planner. It probably depends on what your strategy is and your timeline and how much of your portfolio will be in real estate and what type.


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## anagranite (Oct 23, 2010)

shanny28757 said:


> If you own multiple properties and set up each one into LLCs you can mitigate liability in case anyone comes after you with a lawsuit. If they sue you because of something that happened at XYZ property, the most they can get from you is whatever is assets are attached to that particular LLC.
> 
> in practice it’s more difficult than that because to operate this strategY by the letter of the maw you need totally separate accounts and accounting. This means no comingled funds. You can’t just have a single checking or savings account that you deposit income into and pay bills with. It gets hard to operate for a small side business because of all the paperwork and bookkeeping.
> 
> ...



Good advice, you would always want to separate the properties in different LLCs. You can always own the property in your personal name and have the LLC rent the property, this is also a bookkeeping hassle but definitely doable. 

Are you looking at starting a farm, commercial property, or rental properties?


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## lmholmes11 (Nov 12, 2008)

Thank you everyone for the replies. I'll definitely talk to a CPA or lawer about this. I guess I should have clarified in my first post, I wouldn't be making an LLC because I'm making a profit off of the future properties. They would just be for personal use/hold on to as an investment. I figured that people sometimes put land in an LLC to protect themselves. 

I do have a business set up as an LLC already (I do property caretaking for some people and vacation homes) but I would keep it totally separate from that. 

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## Tilden Hunter (Jun 14, 2018)

I've also seen a father with three adult sons convert the ownership of their camp to an LLC. I'm not sure how it advantaged them, but I can imagine some ways.


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## Luv2hunteup (Mar 22, 2003)

Tilden Hunter said:


> I've also seen a father with three adult sons convert the ownership of their camp to an LLC. I'm not sure how it advantaged them, but I can imagine some ways.


I would hazard a guess that it was to protect each members personal assets in the event of an issue or even a divorce settlement. If the group owned the property and had a legal judgement of say $1M and 2 of the 3 did not have the means to pay their equal share the 3rd would have to make up the difference if he had enough assets. I could be 5%+10%+85% even though each owned 1/3rd of the camp. LLCs are limited to assets of the camp and accounts.

LLC=Limited Liability Corporation.


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## shaffe48b (Oct 22, 2019)

I've always heard but can't confirm that as a landowner you can be sued for trespassers who get injured on your property. If that's the case, then it might make sense if you own hunting properties because it's not unlikely people would trespass onto your land and potentially get injured. Or even someone you invite.


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## Bucman (Jun 29, 2016)

Y


shaffe48b said:


> I've always heard but can't confirm that as a landowner you can be sued for trespassers who get injured on your property. If that's the case, then it might make sense if you own hunting properties because it's not unlikely people would trespass onto your land and potentially get injured. Or even someone you invite.


You are protected by the recreational trespass laws in that case.


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## shaffe48b (Oct 22, 2019)

Bucman said:


> Y
> 
> You are protected by the recreational trespass laws in that case.


What if you give permission


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## anagranite (Oct 23, 2010)

Bucman said:


> Y
> 
> You are protected by the recreational trespass laws in that case.



I do believe this is correct, unless it is a child that is trespassing. Basically they aren't treated the same as an adult. 

There is also a stipulation that you can be sued if they can prove you "intentionally harmed they" or something like that. I'm not an attorney but I talked to my attorney about this when I had people walking my land without permission.


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## Bucman (Jun 29, 2016)

shaffe48b said:


> What if you give permission


If you give permission it's not trespassing.
I provide a release form to all the landowners for their peace of mind.


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## Fishndude (Feb 22, 2003)

LLC. Limited Liability Corporation. That pretty much explains why they exist. 

I had a lawn service at one point, and it was an LLC. If one of my machines threw a rock through the window of a passing car (actually happened once), and the driver had a terrible accident (did not actually happen, it was a rear window, and the Driver was fine, and did not crash), it would prevent the Driver, or their heirs, from suing me personally, for everything I own, and every bit of money I ever make. It's too bad Paul isn't around to nail it down perfectly, but that is the gist of an LLC. 

From a financing standpoint, if you will owe money on the property, an LLC is an entity, but can't necessarily be held accountable for financing agreements signed by a person. So, mortgage lenders (all that I know of) reserve the right to exercise the "due on sale" clause in every mortgage, if the Mortgagor deeds the property into an LLC. IF they find out about it.


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