Living trust treatment

[ILLMAS]

TP brought in a stack of papers and told me he created a living trust and transferred the deeds of his properties to an LLC, but from all the documents I cannot tell how to treat it for tax purposes? Continue reporting on Sch E or create a partnership return?

Thanks

MAS

[Margaret CPA in OH]

Is he a partner with someone or is this a smllc? Were these rental properties? What is the relationship between the living trust and the llc? Any besides his involvement in both?

[ILLMAS]

Is he a partner with someone or is this a smllc?

His wife, however his kids will be the beneficiary.

Were these rental properties?

3 properties are rental and 1 is a personal residence.

What is the relationship between the living trust and the llc?

Honestly, I can't tell, the Revocable Trust Agreement makes no mention of the LLC.

Any besides his involvement in both?

His wife, the kids will get equal share once both parents die.

[Lynn EA USTCP in Louisiana]

Revocable trust = nothing changes until something happens, such as death. Read the trust document.

[Max W]

"His wife, the kids will get equal share once both parents die."

.....after the estate goes thru probate, sometimes a very lengthy and expensive process.

The main purpose of a intra vivos ( living) trust is to Avoid probate. In order to do this, most of the assets

have to be titled within the trust.

Avoiding probate also makes it more difficult for someone to challenge it, whereas a will or an intestate situation can be challenged

by Anyone in probate - like cousin Charlie whom he promised his $100,000 Ferrari to when he dies.

Since the main purpose of the LLC is to protect from liability beyond the value of the LLC property so that the personal residence can not be touched, I would wonder if the trade offs and balances have been weighed. Although LLC requirements vary by state, it would seem prudent to have each rental property with its own LLC. If they are all in one LLC, then a claim against one property would be a claim against all (except that in the trust).

1065, yes.