Best Way to Hold Rental Properties in Georgia for Estate Planning

For most Georgia landlords, the best structure is an LLC owned by a revocable trust. The LLC keeps a tenant lawsuit away from your personal assets in most cases. The trust keeps the LLC out of probate when you die and lets your successor trustee step in if you become incapacitated.

By Melissa Breyer, Esq. Updated 10 min read

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For most Georgia landlords, the best way to hold rental property is an LLC that is owned by a revocable living trust. The LLC keeps a tenant’s claim against the rental away from your home and savings in most cases. The trust lets the person you picked take over if you die or can no longer manage things yourself, with no probate case.

The other ways to hold title each leave a gap. Your own name leaves you open to a lawsuit and sends the property through probate. Joint tenancy and a beneficiary deed can each avoid probate, but neither one helps if you become incapacitated. An LLC by itself limits a lawsuit, but your share of the LLC still goes through probate.

If your rentals are still in your own name, you are not behind. Most Georgia landlords start that way. Which structure fits you depends on how many properties you own, whether they have mortgages, and who you want running them after you.

The Five Ways to Hold Rental Property in Georgia

Georgia rental property investors have five options for how they title and own their properties. The right choice depends on what you are trying to protect against, and most investors are trying to protect against more than one thing at once.

The five structures are: personal name, joint tenancy, beneficiary deed, LLC without a trust, and LLC paired with a revocable living trust. Each of these five structures has its own specific benefits and failure points. For a direct comparison of what changes when the trust holds title directly versus when an LLC inside the trust holds title, see LLC Owned by a Trust vs. Trust Owning Property Directly in Georgia.

For three of these options side by side, see Personal Name vs. LLC vs. Trust for Georgia Rental Properties.

For a full overview of how these structures connect to your broader estate plan, see Estate Planning for Real Estate Investors.

Holding Rental Property in Your Personal Name

Holding rental property in your personal name means a tenant lawsuit against the property is also a lawsuit against you personally. Your bank accounts, other properties, and personal assets can be reached.

When you die, property titled in your own name goes through Georgia probate. The complex probate cases we’ve handled have taken 25 months and cost families $29,700. Rental property is one of the things that can make an estate complex. Your family has to wait for the court to appoint someone before anyone can sell or refinance the property.

Personal name ownership provides no liability protection, no probate avoidance, and no incapacity coverage. It is the default, and for most investors, it is a mistake. See Risks of Owning Rental Properties in Your Personal Name in Georgia for the full breakdown.

Joint Tenancy for Georgia Rental Property

Joint tenancy avoids probate on the first death. The surviving co-owner inherits automatically. But it fails on the second death, when the surviving owner dies with no joint tenant to inherit, and the property goes through probate anyway.

Joint tenancy also does nothing if you become incapacitated, and it does not limit a tenant lawsuit the way an LLC does. If you paid for the property and add someone who is not your spouse to the deed as a joint owner, that is a gift of half the property’s value. It can mean filing a gift tax return even when no tax is owed. For a detailed comparison, see Joint Tenancy vs. Trust for Georgia Rental Property.

Beneficiary Deed for Georgia Rental Property

A beneficiary deed transfers rental property at death without probate. It is easy to set up. But it has five problems that most investors do not see at first.

Beneficiary deeds do not cover incapacity and do not coordinate with an LLC. For the full list, see Problems With Beneficiary Deeds for Georgia Rental Properties.

LLC Without a Trust

An LLC puts a legal wall between the rental and the rest of what you own. Under O.C.G.A. § 14-11-303, a member is not personally liable for the LLC’s debts just because they are a member. So a tenant who wins a judgment against the LLC can reach what the LLC owns, but in most cases not your home or your savings.

That wall has limits. It does not cover a debt you agreed in writing to pay yourself, such as a personal guarantee on the loan.

But an LLC does nothing for what happens when you die. Your share of the LLC is part of your estate, so it goes through probate whether you have a will or not. If you are the only owner and manager, and the LLC’s documents name no one to step in, no one can act for the LLC until the probate court appoints your executor or administrator.

The LLC also does not cover incapacity. Say you are the only owner and can no longer manage the LLC. If no power of attorney, trust or operating agreement gives someone that job, your family has to ask a Georgia probate court to appoint a conservator before anyone can act for you. For the complete list of failure points, see Problems With Using an LLC Without a Trust for Georgia Rental Properties.

LLC + Revocable Living Trust — The Best Way to Hold Rental Property in Georgia

For most Georgia rental property investors, the right structure is an LLC paired with a revocable living trust. The LLC owns the property and provides liability protection. The trust owns the LLC membership interest and provides everything the LLC cannot: probate avoidance, incapacity management, and private distribution to your beneficiaries.

This two-step structure works as follows: you transfer title to the LLC (liability protection layer). You then transfer your membership interest in the LLC to the trust (estate planning layer). The trust names a successor trustee who manages both the trust and the LLC if you die or become incapacitated, without waiting for a court to appoint anyone.

The result: a tenant’s claim against the LLC stops at what the LLC owns in most cases. The LLC stays out of probate, because the trust owns it and you do not. Your successor trustee can manage or sell the property without waiting for a court to appoint anyone.

One caution if the property has a mortgage. Moving a financed property out of your name can give the lender the right to call the loan due. Federal law limits that right when a borrower moves the home they live in into their own revocable trust. Do not count on that rule for a rental you do not live in, and it does not cover a transfer into an LLC. Before you record a deed on a financed rental, ask the lender in writing.

For investors with multiple properties, see One LLC vs. Separate LLC Per Rental Property in Georgia to determine the right LLC structure for your portfolio size.

If you own five or more properties, see Estate Planning for Georgia Real Estate Investors With 5+ Properties for what changes about your trust, LLC structure, and successor trustee responsibilities at portfolio scale.

If you are approaching retirement and want to understand the sell-versus-hold decision and what your estate plan needs before you stop working, see Estate Planning for Georgia Real Estate Investors Who Are Retiring.

How to Set Up the LLC + Trust Structure in Georgia

1

Form the LLC and Transfer Property Into It

File Articles of Organization with the Georgia Secretary of State. Prepare and record a deed transferring the property from your name into the LLC. If the property has a mortgage, read the loan’s due-on-sale clause before you record that deed. Update your property insurance to name the LLC as the insured.

2

Create the Revocable Living Trust

The trust names you as trustee, names a successor trustee to take over at death or incapacity, and names your beneficiaries. It becomes the governing document for all assets inside it, including your LLC membership interest.

3

Transfer LLC Membership Interest to the Trust

An assignment of membership interest document transfers your ownership of the LLC from your personal name to the trust. The LLC operating agreement must also be updated to reflect the trust as the member. Both steps are required. The assignment alone is not enough. For each step in detail, see Putting Your Rental LLCs Into a Georgia Trust.

4

Update Insurance, Leases, and Bank Accounts

Notify your insurance carrier of the trust ownership. Update lease agreements to reflect the LLC as landlord (if not already done). Open a dedicated LLC bank account if you have not already. Keep rental money and personal money in separate accounts, so the LLC’s records show it is run as its own business.

Choosing the Right Structure for Your Portfolio

If you own one rental property and cannot afford the full LLC + trust setup right now, a revocable living trust alone is better than nothing. It avoids probate and covers incapacity even without the LLC liability layer.

For a complete breakdown of what a first-time Georgia landlord needs in place, see Estate Planning for Georgia Real Estate Investors Buying Their First Rental Property.

If you own two or more rental properties, the LLC + trust structure is the plan we recommend for most investors. A property left in your personal name, in joint tenancy, or in an LLC without a trust still has at least one gap. It may be a lawsuit that can reach you, a court case if you become incapacitated, or probate when you die.

For current pricing on setting up this structure in Georgia, see How Much Does Estate Planning Cost for Real Estate Investors in Georgia.

For a direct comparison of a revocable trust and a will across probate, incapacity coverage, cost, distribution control, and privacy, see Revocable Trust vs. Will for Georgia Real Estate Investors.

25 Months Average Complex Georgia Probate Rental property is one of the things that can make an estate complex.
$29,700 What the Complex Probate Cases We've Handled Have Cost An average from the firm's own cases.
5 Ways to Hold a Georgia Rental Only one deals with lawsuits, incapacity and probate together.

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Melissa Breyer

Melissa Breyer

Georgia Estate Planning Attorney

Melissa Breyer is a Georgia estate planning attorney who works exclusively on trust-based estate planning and LLC formation. She personally designs and drafts every plan at The Hive Law after the initial call. Every plan is built from scratch for your specific family, your specific assets, and your specific wishes.

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Frequently Asked Questions

For most Georgia landlords, the best way to hold rental property is an LLC owned by a revocable living trust. In most cases, the LLC limits a tenant’s claim to what the LLC owns, so your home and savings stay out of reach. The trust owns your share of the LLC, so your successor trustee can run it if you cannot, and it passes to your family without probate when you die. If the rental has a mortgage, ask the lender before you move it, because a transfer can let the lender call the loan due.

Most Georgia rental owners need both an LLC and a trust, because each one does a different job. An LLC limits what a tenant lawsuit can reach, but your share of the LLC still goes through probate when you die. A revocable trust avoids probate and covers incapacity, but under O.C.G.A. § 53-12-82(a)(2)(A) your creditors can reach what is in it while you are alive. When the trust owns the LLC, each one covers the gap the other leaves. For the full comparison, see LLC vs. Trust for Rental Properties in Georgia.

Holding rental property in an LLC does not avoid probate in Georgia by itself. Under O.C.G.A. § 14-11-501, your share of the LLC is personal property. Like other property in your own name, it is part of your estate when you die. For an LLC with one owner who also manages it, and no one named in its documents to step in, the LLC has no one to act for it until the probate court appoints an executor or administrator. The usual way to keep the LLC out of probate is for a revocable living trust to own your share.

You can put a Georgia rental property directly in a revocable living trust without an LLC. The trust alone keeps that property out of probate and lets your successor trustee manage it if you become incapacitated. What a trust does not do is limit a lawsuit: a tenant who wins a judgment against you can reach property in a trust you can revoke. For how the two setups compare, see LLC Owned by a Trust vs. Trust Owning Property Directly in Georgia.

At The Hive Law, an LLC and trust plan for rental property starts with the trust package at $3,500, which covers your plan and your home.

Each Georgia rental property adds $550.

Each LLC we form or move into the trust adds $1,250.

Property in another state adds $1,100 per state.

These are flat fees. See How Much Does Estate Planning Cost for a Real Estate Investor in Georgia for what each one includes.

What happens to your rental property LLC when you die depends on who owns your share. If you own it in your own name, your share goes through probate, which takes 25 months on average for a complex estate, based on the firm’s own cases. For a one-owner LLC, O.C.G.A. § 14-11-506 makes your executor or administrator the new member, unless they turn it down in writing within 90 days or the LLC’s articles or operating agreement say otherwise. They cannot act until the probate court appoints them. If no one steps in as a member, the company can end 90 days after your death unless its documents say otherwise.

If your revocable trust owns the share, your successor trustee takes over under the trust and no court appointment is needed. For more, see What Happens to Your LLC When You Die in Georgia.

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