Real Estate Owners

Real estate traditionally has been a great investment for a portion of one’s portfolio. Many of the high net worth clients of Wealthplc own a significant number of real estate investment properties. We are not experts at selecting and/or administering real estate, but we can assist with minimizing your liability risks, transferring the real estate to the next generation and minimizing the probate administration burdens.

Liability Risk

What we see with many clients with investment real estate is improper title ownership of the properties. If a duplex is titled in the individual name of the client, he/she is exposing all other assets to any potential liability occurring on the property.

Example: A renter leaving the front entrance of the client’s investment property is struck by a large ice sheet sliding off the roof of the house. The renter sustains significant injuries and is successful in obtaining a large judgment against the owner. The renter can attach any asset of the owner allowed under the law, and is not restricted to just attaching the house to satisfy the judgment.


Establish a limited liability company (LLC) to own the investment property. In the situation above, the renter would be forced to look to the LLC to satisfy its judgment. Easy enough, but in order for the LLC to be recognized by the courts, the client must have the proper documents in place. We can help.

Transfer the real estate to the next generation

For transfer tax purposes, the gift tax is determined on the “fair market value” of the asset being transferred. If the real estate is owned by the LLC with restrictive transfer provisions, the value of the LLC interests that the client transfers to a trust for family members is valued at perhaps 30-40% less than the appraised value of the real estate on its own. Bottom line: a client can give away more of the LLC interests without paying any gift tax compared to giving away fractional ownership rights in the real estate.

Probate administration

Client living in MA owns investment or vacation property in NH, or FL, or RI, or VT, etc. Upon the passing of the client, you would assume that the real estate would be administered under MA as part of client’s estate. You would be WRONG. Because real estate is governed by where the real estate is located, the client’s family has to establish a probate estate in Massachusetts, and then hire an attorney in the state where the real estate is located to establish a second “ancillary” administration to properly transfer the real estate. More expense and more headaches. However, if the real estate was owned by a LLC or a trust, the client’s family would avoid the ancillary administration in the second state. Be smart by being prepared.