Real Estate Ownership and Estate Planning
Real estate includes more than just your primary home. It can also mean a vacation property, rental house, or investment property. The best way to own each type of real estate depends on your goals, your family situation, and your state’s laws. Below, we break down the most common types of property and how to protect them.
Primary Residence
Your primary home often has special tax benefits, so how you own it matters.
If you are married, tenancy by the entirety may be available in your state. This form of ownership protects the home from the creditors of one spouse (with limited exceptions, such as federal tax liens). It also allows the surviving spouse to automatically inherit the home without going through probate.
You may also be able to transfer your home into a joint revocable trust. This keeps tenancy by the entirety protection (if your state allows it) and avoids probate. Your wishes, as outlined in the trust document, guide what happens to the property after your death.
If you are single, owning the home in your name lets you claim primary residence tax benefits. You can also transfer your home into a revocable living trust to avoid probate. If you want strong asset protection, you may consider certain irrevocable trusts. These can shield the property but often require giving up some control.
Keep in mind that some states offer homestead exemptions or other bankruptcy protections for a primary residence. However, moving the home into a trust might cause you to lose those protections. Speak with an estate planning attorney before transferring your home into any trust.
Vacation Home
Vacation homes often carry both financial and emotional value. Placing your vacation home into a trust or LLC can simplify inheritance and protect the property.
With a trust or LLC, you can:
- Set rules for how the property is used and maintained
- Decide what happens to the home after you pass away
- Reduce family conflict by creating clear guidelines
An LLC can also provide liability protection. If someone is injured at the property and sues, they can only collect against LLC-owned assets — not your personal accounts or property. Likewise, if a member of the LLC is sued personally, the vacation home is harder to seize.
Be aware that in some states, single-member LLCs do not offer the same level of protection. And before transferring a long-owned family cabin or cottage, check with a tax advisor to ensure the move won’t trigger higher property taxes or other unintended costs.
Rental Property
Rental property is treated differently from a residence because it produces income. It also carries a higher risk of lawsuits from tenants.
Transferring the property into an LLC can protect your personal assets. If a tenant is injured, sues, and wins a judgment larger than your insurance coverage, they can only go after the LLC’s assets — not your personal ones.
An LLC may also shield the property from your personal creditors. However, as with vacation homes, protection for single-member LLCs can vary by state, so it’s important to confirm your state’s rules before proceeding.
Take Action Today
Whether you own a primary residence, family camp, or rental property, choosing the right ownership structure is key to protecting your assets. Our team can help you review your options and create a plan that fits your needs — now and for future generations.
📞 Call us today at (207) 848-5600 or visit our CONTACT page to schedule a consultation.
