Protecting Your Rental Property with an Estate Plan
Florida is a wonderful place to live, and not just because of its sun and sand. Entrepreneurs can capitalize on Florida’s appeal thanks to rising demand for rental properties. Because Florida also features low property taxes and no state income tax, rental property offers fantastic income potential. However, the issue of what happens to the property after the owner’s death can be complicated.
Rental Property Issues
Rental properties offer amazing income potential for you and your heirs, but there are also difficulties that come with this opportunity. Legal liability for injuries on the property, lease conflicts, and even vicious dogs owned by tenants can all result in unexpected legal expenses. Liability insurance can help, but in the event of a larger claim, your other assets may be at risk. Without the proper protections, your heirs could face the same risks.
Estate Planning Can Help
You’ve worked hard to build your estate, including your rental property business, so you no doubt have plans for what happens to it once you’re gone. Whether the property is to be passed to an heir or the profits distributed to heirs from a trust, you’ll need a good estate plan to make it happen.
Although the laws governing estate planning are complex, the process of protecting your rental property is really just a matter of decision-making alongside an experienced estate planning attorney. Among the questions you should be ready to answer are:
- How will you protect your assets? Rental properties are subject to various liabilities and failing to adequately protect yourself from suits can put all of your estate assets at risk. You should, of course, have liability insurance, but an estate plan that establishes ownership of property through a business entity can offer even more protection from larger claims.
- What should happen to your property? You may choose a specific heir to inherit it, place it in a trust from which heirs receive profits, or allow your heirs to decide.
- How would you like heirs to benefit? If you want to leave your heirs with all of the financial benefits of rental property without the headache of managing it, consider an LLC or Florida Land Trust. This allows a designated trustee to collect rental income and distribute it to your heirs, simplifying the process for your loved ones. A Florida Land Trust will also keep the property out of probate, which can be a long process.
- Who should be in charge of your assets? An essential part of estate planning includes establishing a trustee or power of attorney. This person will help to ensure that your estate is handled exactly as you wish.
The answers to these questions will frame your estate plan. However, answering the questions is not enough. Legal documents will need to be created in order to put your plan into motion.
Contact an Estate Planning Attorney
Every estate is different. Don’t take on the daunting task of creating your estate plan alone. David Toback, Attorney at Law will walk you through the process of ensuring that your estate plan is in order. Contact our Tampa office today to schedule a consultation.
Resources:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Index&Title_Request=XLII#TitleXLII
forbes.com/sites/andrewdepietro/2018/09/15/best-cities-own-rental-property-florida/#3b21496f32df
https://www.davidtobacklaw.com/resolve-to-protect-your-heirs/
