Should I hold my LA apartment building in an LLC, a living trust, or both?
They solve different problems. An LLC gives you a liability shield between the building and your personal assets, at the cost of California's $800 minimum franchise tax plus a gross-receipts fee; a living trust gives you probate avoidance and a clean handoff at death, but zero liability protection. Serious LA owners commonly use both: the LLC holds the building, and the trust holds the LLC membership interest. The traps are in moving title — done wrong, a transfer can trigger documentary transfer tax or a Prop 13 reassessment.
What each structure actually buys you.
The LLC is insurance you hope never matters: if a tenant lawsuit exceeds your policy, the claim stops at the entity instead of reaching your house. It costs the $800 annual minimum plus a fee that scales with gross receipts (starting around $900 once rents pass $250,000), plus bookkeeping discipline — commingle funds and a court can pierce the shield. The trust does one job supremely well: at death, the successor trustee steps in without probate, which in LA County can mean skipping a year-plus court process. Neither replaces the other, which is why the standard structure for owners with real equity is both — building in the LLC, LLC interest in the trust.
The title-transfer traps.
Moving a building you already own into an LLC is usually clean if — and only if — the proportional ownership stays identical: same people, same percentages, before and after. Match that and the transfer is generally exempt from documentary transfer tax and does not trigger Prop 13 reassessment. Shift the percentages, add a partner, or later transfer more than 50% of the entity's interests, and you can trigger reassessment under the legal-entity change-in-ownership rules — the assessor has forms specifically for catching this. Also check your loan: most mortgages have a due-on-sale clause, and while lenders often consent to LLC transfers, "often" is not "always." This is a fifteen-minute conversation with a real estate attorney before you record anything.
Will transferring my building into my own LLC trigger a property-tax reassessment?
Not if the proportional ownership interests are identical before and after the transfer. Later changes to who owns the LLC can trigger reassessment, so the structure needs discipline over time, not just at formation.
Does a living trust protect me from tenant lawsuits?
No. A revocable living trust provides no liability shield at all — its job is avoiding probate and managing succession. Liability protection comes from insurance first and an LLC second.
If the building is in an LLC, do I still need a trust?
Usually yes. Your LLC membership interest is a personal asset — without a trust, it goes through probate like anything else you own at death.
SHAYA LOWENSTEIN · LYON STAHL INVESTMENT REAL ESTATE · DRE #01942326 · (323) 944-2221