We know everyone likes “Top 10” lists. Here you will find the Top 10 Questions about Surrogate Documents for LLC’s and Trusts for Asset Planning.
- What is the difference between the durable power of attorney for health care and the living will?
Health Care = you are still alive and expected to recover
Living Will = you are brain dead with no hope of surviving
- Is the durable POA for health care valid in other states? What if an event happened outside the state of Ohio?
Yes
- Please explain the income impact on Medicaid? Rental income, interest income, retirement income etc.?
Income is counted no matter the source – whoever’s name is on the check gets to keep it. If equal payees, it is split.
- Is the step up basis like this? Purchase price of property 42500, current value, 85000, so the beneficiaries would receive the assets valued at 85K as their cost basis after it is transferred to either the LLC or the trust?
LLC = $42500
Trust= $85,000 at death of grantor
- Under either the LLC or the irrevocable trust, is the trustee allowed to sell real estate holdings and have the cash proceeds stay within the trust or the LLC?
Yes
- Can either the trust or the LLC hire a property management company to manage the real estate rental properties, collect rent, find tenants, handle repairs etc. and then accept a fee for this paid out of net rentals as an expense?
If the task is done by a contractor, no, but the trustee or managing member can be paid a fee for time spent and expenses incurred in hiring the contractor.
- We own two properties with our son Craig with 50/50 share. It would seem to simplify the process if we quitclaim deed our interest in one property to him and he did the same on the other property. Is this a viable option? Does the cost basis remain the same? Are there other tax consequences?
Depends on the value, if bought together should not be a basis issue or have tax consequences.
- We don’t understand the distinction between the LLC and the irrevocable trust, can you clarify this?
See #4
- We are looking to purchase a new home. Can we move forward even though we have not made a decision regarding the choice between the LLC or irrevocable trust?
Yes
- In conjunction with the loan, the bank is looking to secure the loan with assets that we would place in the trust or the LLC as collateral. Is that permissible?
No, should not be used. The loan should only secure the real estate purchased.
- We are uncomfortable placing all to the rentals in the trust or LLC. Could we place just 2 or 3, which would then enable us to sell the others and have the cash available to us?
You can put whatever you wish to transfer into either entity. The transfer starts the 5 year look back clock
Yes, we threw an extra question in there for good measure, as #8 wasn’t fully answered. If you or your family need assistance with estate and asset planning, please contact the trusted Ohio attorneys from Browning & Meyer Co., LPA today.