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How Do I Gift an LLC That Holds Rental Property to a Trust for My Son?

Attorney Thomas B. Burton answers a reader question about how to gift the owner's interest in an LLC into a Trust in order to gift these properties to the reader's son upon their death.

Transcript of Video: How Do I Gift an LLC That Holds Rental Property to a Trust for My Son?

Today's question comes from Milwaukee

Wisconsin and the reader writes how do I

gift an LLC that holds rental property to a

trust for my son he explains I wish to

gift several rental properties that are

titled to an LLC to an irrevocable trust

for my son if it were titled in my name

it would be easy to make the transfer

but in this case we would not be

changing title but rather ownership of

the LLC so great question and you're on

the right track here and this is a good

method for a couple reasons which I want

to discuss first putting your rental

properties in an LLC is smart for

liability protection and for leaving

them to the next generation or to your

heirs for estate planning

second it's smart you're planning to

leave them at death because real estate

often appreciates and by leaving them to

your son at death he would get a step-up

in basis meaning whatever they're worth

at your death he would that would

become his value if he were to sell them

so for capital gains taxes let's say you

bought the properties for two hundred

thousand twenty years ago and when you

die they're worth five hundred thousand if

you leave them to him at death your son

will take them at five hundred thousand

and if he sold them for five hundred he

would potentially owe no capital gains

whereas if you gifted them to him today

he would take them at your basis of two

hundred thousand and owe capital gains

tax of 15% on the $300,000 that he made

for selling them for five hundred

thousand when his basis is at two

hundred thousand so it's a great method

to leave highly appreciate assets like

real estate to someone upon death like

you're doing now as for how to do this

you can simply execute an assignment if

you're the sole member of your LLC you

can assign your membership interest

that's what we call your ownership

interest in the LLC in

Wisconsin you can assign it to your

trust so that it's governed by the terms

of your trust because an LLC membership

interest is considered personal property

you can do this through an assignment

that you can execute in front of a

Notary a simple contract I do this all

the time for my clients any good estate

planning attorney could help you execute

this assignment of your 100% of your LLC

interest into your irrevocable trust

then your LLC and what that owns the

properties would be governed by the

terms of your trust upon your death so

you don't need to change the deed this

way because the LLC already owns the

rental properties so I would say this is

a great plan for the multiple reasons I

outlined above and again you should be

able to do this very simply by

contacting any good estate planning

attorney can help you execute that

assignment and get that LLC interest

right into your trust great question and

thank you for asking!

© 2019 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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