How to Own Your Real Estate

Real estate is more than just your primary residence. It can include other real estate such as a vacation home or a rental property. Depending upon the type of real estate you own, the ideal form of ownership can vary. Below, we take a look at the different types of real estate and make suggestions about the best form of ownership for each.

1. Primary Residence

Because of the special tax treatment a primary residence receives, you need to very carefully consider how your home is owned. In applicable states, “tenancy by the entirety” offers married couples creditor protection from the creditors of one of the spouses (with a possible exception for federal tax liens) while still preserving relevant tax benefits. It also allows the automatic transfer of ownership to the surviving spouse upon the death of the first spouse without court involvement. Transferring ownership of the primary residence to a joint revocable trust may also be an option if you live in a state that allows the tenancy of the entireties protection to transfer to a joint revocable trust. Missouri allows for such protection. Ownership by the trust also means that the real estate will not go through the lengthy, expensive, and public probate process but will instead be handled according to your wishes as specified in the trust document.

Transferring ownership to a revocable living trust can allow you to avoid the probate process. If asset protection is a major concern during your lifetime, certain types of irrevocable trusts are best suited for your needs but may require you to give up some control of the property.

Also note that the bankruptcy code may provide additional protections for a primary residence (i.e. your state may have a “homestead” exemption. Missouri’s is quite modest). However, in some states, transferring your primary residence to a trust may eliminate the homestead exemption because the trust will be deemed to be the owner of the residence rather than the debtor. If this situation could apply to you, it is important that you meet with a knowledgeable estate planning attorney before making any transfers of your primary residence to a trust.

2. Vacation Home

For some families, the vacation home has high monetary value, but also significant emotional value as well. Ownership of a vacation home by a trust or limited liability company (LLC) can be advantageous because it addresses two main priorities: ease of transfer to the next generation and asset protection.

With a trust or LLC, you are able to determine a set of rules for how the property is to be used and maintained, as well as designate what is to happen to the vacation home once you pass away. This can be a great solution if you want to ensure that the vacation home stays in the family for generations with minimal family conflicts. An LLC is also a great way to allocate income and expenses between family members in the event that the property is rented throughout the year, and ownership can be adjusted by relative percentage use.

An additional benefit of having an LLC own the vacation home is that it provides limited liability from outside claims. If a judgment is entered against the LLC, the creditor is limited to the assets of the LLC to satisfy its claims, not your personal assets or those of the other members. Also, if you or another member have a judgment entered against you for a claim unrelated to the LLC, it will be harder for a creditor to force a sale of the vacation home. This can be incredibly helpful if you wish to pass on the vacation home to the next generation without having to worry about the individual financial situation of each of the new members.

Note: In some states, single member LLCs (an LLC in which you are the only member) do not enjoy the same protection from your personal creditors. The rationale of these laws is that your creditors should be able to seek relief through your LLC interests to satisfy their claims because there are no other members that will be negatively impacted their seizure of money and property owned by the LLC. Fortunately, this is not the rule in Missouri.

If the vacation home has been in the family for many years, it is important to consult with us and your tax advisor to make sure that transferring your vacation home to a trust or LLC will not cause an increase in your property taxes or other unintended consequences.

3. Rental Property

As a stream of income, instead of a residence, the bigger concern with rental property is usually asset protection. Because the occupants of the rental property can change over time, as a landlord and owner of rental property, there is a higher probability of lawsuits arising in connection with it. For rental property, transferring ownership to an LLC is a great option. If a renter gets injured on the property, sues the LLC that owns the property, and obtains a judgment that exceeds any liability insurance you have, the renter can only go after the assets owned by the LLC, not your personal assets or those of any other owners of the LLC, to satisfy any claims.

In addition, ownership by the LLC may protect the rental property from your personal creditors. However, if you are forming a single member LLC, it is important to have us check state law to make sure creditor protection is available. Fortunately, creditor protection for single member LLCs is available in Missouri.

Give Us a Call Today!

Whether you are concerned about your primary residence, family cabin, or rental property, we are here to assist you in protecting this valuable asset. Due to the various considerations for selecting a form of ownership, it is important to have the right advisors helping you along the way. Give us a call so we can discuss your current and future real estate ventures and the best way to protect them for generations to come.

Picture of Dan Schnurbusch

Dan Schnurbusch

Dan is the owner of Schnurbusch Law, an estate planning and probate law firm in the St. Louis and St. Charles areas of Missouri.

Share:

More Posts

Create an image of a modern, well-lit office desk with legal documents, a pen, and a computer screen displaying a property title or beneficiary deed form. In the background, include subtle, blurred elements such as a house model or title certificate symbolizing property ownership. The overall color palette should feel professional and approachable, using warm tones like browns and soft beiges to symbolize trust and stability. Add a small plant or a framed photo to create a welcoming, personal touch that resonates with family and estate planning themes.
Dan Schnurbusch

Handling Jointly Owned Property with Right of Survivorship in Missouri

Discover how to handle jointly owned property with right of survivorship in Missouri. Learn the essential steps for recording an Affidavit of Death to ensure a smooth title transfer and avoid probate complications for surviving owners. This guide also addresses what happens when the last joint owner passes away without a beneficiary deed and provides tips for proactive management of jointly owned property. Streamline your estate planning process and safeguard your family’s interests.

Read More »
Create an image of a modest house in a peaceful suburban Missouri neighborhood, with sunlight streaming through tall trees, symbolizing transition and serenity. In the foreground, include a set of legal documents laid out on a table, with visible elements such as a pen and a title deed folder, subtly indicating the process of transferring ownership. The overall tone of the image should feel empathetic and approachable, reflecting the support and guidance offered through the probate process.
Dan Schnurbusch

How Do I Transfer a House Title to My Name After the Owner Dies in Missouri?

Navigating the process of transferring a house title after the owner dies in Missouri can feel overwhelming, especially for heirs, executors, and beneficiaries. This comprehensive guide breaks down whether the property requires probate and outlines the various methods available for transferring ownership, including joint ownership, beneficiary deeds, and the specific probate options in Missouri. Understanding these steps will help you make informed decisions and simplify the transfer process during a challenging time.

Read More »
Create an image of a professional-looking desk with legal documents scattered neatly across the surface, including visible text elements like "final accounting" and "debt settlement." Include a gavel and law books in the background to symbolize the legal nature of probation. A personal representative figure, such as a business-dressed individual, can sit thoughtfully with a pen poised over a document. A subtle Missouri flag or outline integrated in the scene would give it a localized touch without overwhelming the image. Use warm, neutral tones to create an approachable yet authoritative atmosphere.
Dan Schnurbusch

Closing a Probate Estate in Missouri: A Step-by-Step Guide for Executors

Navigating the closure of an estate can be daunting for personal representatives and heirs in Missouri. This comprehensive guide walks you through the essential steps to properly close an estate, from addressing creditor claims and final tax obligations to understanding the formal closure processes under Missouri law. Discover how to avoid common pitfalls and why professional legal guidance can be invaluable in ensuring a smooth conclusion to the probate process.

Read More »
A warm, softly lit image of a family sorting through personal items like heirlooms, jewelry, and photo albums in a cozy living room. Include a mix of vintage furniture, sentimental objects like a small jewelry box being opened, and some paperwork on the coffee table to symbolize the probate process and inventory. The scene conveys a sense of heritage, organization, and collaboration, reflecting the thoughtful handling of personal property.
Dan Schnurbusch

Handling Personal Property After Death in Missouri Probate

Navigating the complexities of personal property during probate in Missouri can be overwhelming for executors and beneficiaries. This guide covers essential steps for handling personal items like furniture and jewelry, including inventory requirements, legal protections against creditors, common challenges such as loss or disputes, and best practices for smooth distribution. Ensuring compliance with Missouri law while keeping beneficiaries informed is crucial for honoring the wishes of the deceased and minimizing conflicts.

Read More »
Generate an image of a professional setting featuring a clean desk with legal documents, a laptop open to a probate checklist, and a Missouri map highlighted in the background. Include a pen and family photographs subtly positioned in the corner to evoke a personal touch. The overall lighting should be soft and welcoming, with a calm and professional color palette of blues and neutrals, signaling trust and reliability.
Dan Schnurbusch

How to Claim a Deceased Loved One’s Bank Account in Missouri

Navigating the process of claiming a deceased loved one’s bank account in Missouri can be overwhelming. In this comprehensive guide, we explore the main methods available for accessing these assets, including joint ownership, Transfer on Death (TOD) beneficiary designations, and the probate process. Learn how to simplify the claiming process with tools like the small estate affidavit for accounts worth under $40,000, and understand when full probate may be necessary. Prepare yourself with the right steps, essential documentation, and insights on avoiding common pitfalls to ensure a smoother transition during this challenging time.

Read More »
Create an image of a professional real estate investor reviewing documents at a wooden desk in a bright and organized office. On the desk, include a title report, a small stack of legal papers, and an open laptop displaying a spreadsheet or property search tool. In the background, show a bookshelf with neatly arranged files and books on "Missouri Probate Law." Add a light map of Missouri on a wall to subtly convey the location relevance. Use warm, natural lighting to keep the scene inviting and professional.
Dan Schnurbusch

Essential Probate Checklist for Missouri Real Estate Investors

Navigating Missouri’s probate real estate market can be complex. This essential checklist guides real estate investors through confirming ownership, identifying seller validity, assessing estate size, planning for flexibility in the probate process, and engaging expert legal support. By following these steps, you can minimize risks and maximize opportunities in probate property investments. Learn the critical elements that every investor needs to know to succeed in Missouri’s probate system.

Read More »