When you invest in a real estate property, it is important that you plan to protect the both the investment property and yourself personally from liability that may arise from the property. If you are not living in the property yourself and you have renters, there is always risk that someone may be injured on the property at some point. In that case, the owner of the property may end up being sued by the tenant, a guest or even a trespasser (if you own the property in your own name, you will be the one that gets sued). On the other side of the equation, there is always the possibility that you may get sued personally at some point on an unrelated issue (for example, if you get into an car accident and someone is injured and the insurance policy is insufficient to cover the full amount of the claim, you will likely be sued personally – sometimes these cases end up in multi-million dollar judgment awards in favor of the plaintiff). In either case, if you have not properly planned for protection, either you or your property – or both – will be at risk.
If you invest in residential real estate in the State of Nevada (whether you are a Nevada resident or from another state), you are in excellent position to be able to protect yourself and your real estate investment property. As an alternative to the traditional real estate holdings LLC, one of the best and most cost-effective ways to protect your real estate investment is to put your Nevada real estate investment property into a Nevada Real Estate Trust.
What is a Nevada Real Estate Trust? A Nevada Real Estate Trust is a unique trust that R.D. Johnson Law Offices has created to enable real estate investors to protect their real estate investment property. The Nevada Real Estate Trusts which we form are created pursuant to NRS Chapter 166 as a Self-Settled Spendthrift Trust, and crafted specifically to hold a real estate investment property. Under the Nevada law, the Nevada Real Estate Trust will accomplish the following for you:
- It will protect the real estate investment property from future personal judgment creditors (such as the car accident case);
- It will shield you personally from liability that may arise from the real estate investment property that the trust owns (such as the slip and fall case, pool accident, etc), even if the claim exceeds insurance policy limits); and
- The Nevada Real Estate Trust, much like an ordinary revocable living trust, will avoid probate of the property when you pass away (the trust will have a successor trustee that steps into your shoes to manage the trust after your passing and the Trust will spell out who will receive the property or the proceeds after your death, all without any probate court proceeding or involvement).
- The Nevada Real Estate Trust will avoid having to pay annual LLC or other business entity filing fees, as the Nevada Real Estate Trust is a one-time set up fee.
- If anonymity of ownership of the property is desired, the Nevada Real Estate Trust may help you to accomplish that as well, since a trust can hold title to property in its own name in Nevada.
- Also, if the property is mortgaged, if the real estate property is a 4 unit or less residential property and the borrower is the beneficiary of the Trust, the transfer of the property to the Nevada Real Estate Trust will not cause a trigger of the due on transfer clause in the mortgage, due to the federal law (the Garn St. Germain Act) that protects against mortgage due on transfer clause triggers when a residential real estate property is transferred to a trust.
- The Nevada Real Estate Trust can peacefully co-exist with other estate planning devices that you may have, such as a Revocable Living Trust or a Will.
If you are not a Nevada resident, don’t worry. You can still establish a Nevada Real Estate Trust to hold your Nevada real estate investment property, as the Nevada Spendthrift Trust law specifically states that a non-Nevada resident can establish a Nevada Spendthrift Trust if: 1) some of the property is Nevada based or controlled property; or 2) there is a Nevada trustee or co-trustee designated in the trust that is a Nevada resident or a Nevada trust company or bank.
As with the traditional avenue for real estate investment properties, a separate Nevada Real Estate Trust may (and should) be established to hold each property separately. This is advisable, so as to limit any liability against the property that arises due to an injury on the property to the property itself, in the event that the property insurance policy is not sufficient to cover the entire claim.
All things considered, the Nevada Real Estate Trust is an excellent way to hold your Nevada real estate investment properties.
If you have any questions or would like to schedule a free consultation to discuss the Nevada Real Estate Trust with us, click here: https://rdjlaw-lv.com/contact/