Submitted by Christopher S. Nudo on
Below is the transcript of the video and is only being provided as a matter of convenience, but we highly encourage people to watch the video.
hey good morning well or this afternoon or i suppose this evening depending on when you're actually watching it but for the live viewers it's the morning and happy friday i am christopher nudo i am an attorney that serves the uh arlington heights elgin northwest suburbs of the chicagoland area and uh we focus on estate planning uh small business real estate and uh not-for-profit work we're here today because we have some exciting uh topics to cover and um so let's just jump right into it shall we um today i'm here to discuss uh real estate um a family trust uh which is really uh nothing more than a regular trust uh trusts are all about just application and um in this instant um we're gonna just be talking about a trust and its interface with uh your your trust and its interface with real estate uh additionally we're gonna put in a little smattering this morning for uh kids leaving for college and uh the necessary or should i say highly recommended documentation you should have as your child leaves for school these are just and a lot of the stuff that i'm we're covering today is very illinois specific uh so uh hold on tight because here we go uh i'm gonna uh begin by talking about uh what options you have when you own real estate so when purchasing real estate uh if you and we're talking about the investing type this is the home that you want to rent this is the commercial building you want to rent we're not talking about your primary residence that's a topic for a whole nother discussion today we're talking about if you want to get involved in investment real estate or if you want to
you already are an investor in real estate and you want to make sure that you're set up in the best way possible now basically uh there are three ways that you can hold title to real estate that is recommended actually four uh the first one is just holding it in your own name uh that is for sure very simple uh it is the least expensive uh but it comes with the greatest amount of exposure second you could hold title to real estate in a limited liability company this is the often the vehicle of choice for people that are going to invest in multiple pieces of real estate over the years and probably gives you the best protection in between those two you have holding property in trust and when it comes to trust there are two different options one option is because we live here in illinois you have an illinois land trust and the second is some form of other trust but most commonly the the grantor living trust is the trust used so what are some of the considerations you should think about when choosing the right vehicle to hold title to your investment property well let's first talk about excuse me who you are and what your goals are
if you're just going to buy let's say you are um moving into a new home you've decided you've outgrown the home that you're currently in and you're going to buy a new home and you don't need the money from the sale of your current home to buy your new home so your idea is you're going to rent your current home and you're going to turn it from your primary residence into some form of income property well there's um i would recommend two different uh ways to approach this the first one would be just leave it in your name alone now in my brain i'm thinking that you are a married couple and the home is owned by uh the two of you and so it's owned in some form of joint tenancy joint tenancy means that if one of the spouses dies then the other one is the sole survivor to the property if you own the property in joint tenancy or tenancy by the entirety and you then buy your new home and turn this home into a rental property then one of the simplest ways to manage the property is to just leave it in your name alone and get lots of good insurance insurance is your best defense sometimes against problems that can occur with a rental this is a very inexpensive and very comprehensive way of dealing with it second if we're really concerned not necessarily about the liability issues but rather succession if you and your spouse should die for instance who would own the home and how would it transfer to whomever could manage it or sell it etc then this is where moving the property into either an illinois land trust or some sort of grantor living trust would make a lot of sense if you because both vehicles permit for the transfer of the property upon the death of both people who own the property coincidentally starting january 1st of this year 2020 i should say starting january 1st of next year 2022 um illinois is uh revamped the transfer on death statute and will permit also for the filing of a transfer on death instrument so then you will have multiple ways in which to transfer the interest to home in the event that both husband and wife passed away now um you say chris that's all nice but i'm much more sophisticated than that i have uh multiple rental properties or i intend on buying multiple rental properties how should i be set up
well that is an excellent question i'm so glad you asked so my recommendation is in a perfect scenario you create a limited liability company and you place a piece of rental real estate in that limited liability company and you do that for each per piece of uh investment real estate that you buy you heard me right one llc per piece of real estate so if you have six rentals you have six llc's now you may say to yourself gosh that seems like a lot of money and setup and maintenance and possible tax returns etc etc and the point is you're right so there are ways around this to make it not so cumbersome but why do we make these recommendations we make them because what we're trying to do is create silos and each piece of real estate put into its individual limited liability company silos or protects that piece of real estate from any a type of um casualty so it does not uh it does not spill over into another piece of rental property for instance uh you have a rental uh where something bad happens somebody dies in the property and it's not by a natural death maybe it's a murder and um for some reason you as the landlord are being held responsible in some form of negligence so uh you're being sued if your property is siloed in its own limited liability company then any exposure that spills over from that negligence lawsuit will not affect your other pieces of investment property see how it is encapsulated it is siloed uh from the other property that you own this includes your personal property as well is protected because the only thing that is exposed is that piece of property and the llc that is in it so um i i mentioned that you know uh these items can be very complicated at times from a paperwork standpoint management standpoint and that's why i always recommend if you're going to be a big real estate investor you should create your own management company this is one company that manages several pieces of real estate this is how you can combine the um you can have one vehicle that manages multiple pieces of real estate without having separate books for each piece of real estate and this is how you can eliminate multiple checkbooks and there's there's all kinds of benefits to having a management company that manages all of your rentals finally we had talked about trust and the fact that a trust can be used and when should i use a trust well you should use a trust to manage your real estate number one if you're not considered a real estate investor so if it's just a hobby that you're doing or like i mentioned in the beginning it's a piece of real estate that you once lived in and now you're renting because you bought a new piece of property i wouldn't consider you a professional real estate investor it would be more of a hobby kind of thing that's where we can use an illinois land trust or we can use a grantor living trust or starting in 22 we can use a transfer on death instrument so which of these is the right vehicle for you well a lot depends you know one size does not fit all so a a land trust is a good vehicle if you want to try and create some anonymity keeping your name out of the public record as much as possible a grantor living trust is a great vehicle if we want to take into consideration all of your other assets that you have and do some more extensive estate planning and keeping your properties out of probate in the event that you uh pass away and finally um the transfer on death instrument great vehicle but again not available until december uh january of 2022 all right so if you have any further questions with regard to this topic uh we just skimmed the surface on it uh but yeah this is just a little uh introduction to um when we should consider limited liability companies trusts and uh just owning property outright in your own name and uh the pros and cons now um one of the other topics uh it's kind of timely uh it's uh early august and uh when i'm recording this and kids are getting ready to go back to college and i strongly recommend that parents have power of attorney for health care and power of attorney for property for their students that are heading back to school and the reason for this is uh in the event that your student ends up with some kind of severe illness or injury while at school you want to have documentation on hand that lets the medical providers the first responders know that you have permission to act on behalf of your child and this is not something that is just granted naturally through the law especially if your child is out of illinois uh this differs from state to state so i always recommend that a parent hold a health care power of attorney over their child so that in the event of some tragedy the chi the parent has the legal authority to speak on the child's behalf
this is also true with regard to financial decisions so if there should be an event at college which renders your child not uh incapacitated in some sense and you need to speak on your child's behalf having power of attorney for property can save the day again as you change state lines as kids go to uh school in other states even here in illinois if the time arises where a parent needs to step up and have the authority and your child is over the age of 18 then uh having a power of attorney for property is very very very important so uh the that's just my little uh college tip for the day um
i think we have um
a couple of questions um i think i'm gonna do a quick uh summary here and then we're gonna um uh go to questions and wrap up it's gonna be a light show today um so i just wanted to let you know that a couple times a month i am here on facebook live sharing legal tips and guidance for parents and guardians and uh uh students and just about everybody um on little things that are in my wheelhouse that i can share and help you uh in the law and uh so today we talked about if you're a real estate investor or just a casual real estate owner that rents property uh what are some of the best ways to hold title to those properties and why and we also gave an encouraging tip to parents and students heading back to college and the use of powers of attorney and why parents should have them we're going to take a few questions uh here and then we'll wrap it up so um our first question is a big one i believe i did an entire video on this but the question is what is the difference between a will and a living trust and in illinois here there are myriads of differences between wills and living trusts but anecdotally why does one use one over the other and i would tell you that living trusts are used the vast majority of time for two key reasons number one they avoid probate if properly used and number two they are aids in taking full advantage of the estate tax laws here in illinois a will on the other hand is a document that we use only in instances where the estate is very small or very uncomplicated and we don't have probate issues to deal with when i analyze an estate and decide whether i'm going to recommend a will or a trust the very first analysis i do is how many of the assets does the individual or couple own that are potentially probate assets and then the more probate assets they have the more likely it is i'm going to recommend a trust over a will next question that came in is when someone passes away and uh their will is read why aren't the assets transferred then okay there's two things there first of all the whole concept of when your will is read that is a hollywood thing we don't actually do the reading of the will this is not where we sit around the big table like they did in the movie clue and read the will um uh um uh also that aside let's assume there was a reading of the will and we all thought we were on some kind of hollywood movie set um the assets are not transferred then simply because a will must be admitted to the probate court of the county in which the individual died once before assets uh before the executor in the will can have the authority to transfer any assets the will must be admitted to the probate court um creditors must be given six months notice in which to file a claim and uh then at the end of that period if all creditors are satisfied then uh assets can be transferred so assets cannot be transferred through a will uh any time uh soon after an individual has died because of the illinois probate act which gives creditors the first six months to lay claim to any assets in the estate next question um who is the best person to designate as the executor of my will or the trustee of my trust uh the answer is somebody who is fiscally responsible and extremely trustworthy simple enough next question um can i include non-family members as beneficiaries of a trust yes that's the beautiful thing about a trust and a will is that you can name just about anybody as the benefactors of a will or a trust this includes charities it includes a ministry such as churches it includes uh your best friend etc etc so um you can include just about anybody family members can be excluded by the way included it doesn't matter everybody's treated equally
next question how much does it cost to work with an estate planning lawyer well not as much as you would think working with an estate planning lawyer is probably one of the best investments you can make because we're going to take a very holistic approach to your estate we're going to look things over and we are going to recommend the appropriate tools to ensure that we don't use a cannon to shoot a mouse um but rather we use um you think of the three bears we're gonna pick the porridge that is just right for you and your family um and uh so when you are done you have paid for the perfect blend of estate planning documents for your family that's why i always recommend that you get this done with a professional
what is the difference between working with a lawyer and doing the paperwork yourself online well the difference is significant number one uh working with the right professional is gonna ensure that the documents that are prepared are prepared uh properly number one number two that they are executed properly um when you're doing you're doing your uh ass when doing your estate plan yourself with a do-it-yourself kind of kit um those actually are in some cases not terrible they are designed with a minimalist approach but they are not bad documents or i haven't seen a terrible document but here's where things get uh wonky and that is a lot of times in the execution the documents are not signed appropriately there are a lot of necessary steps that need to be taken from multiple witnesses the amount of um uh language that is used uh for the witnesses the uh um uh the notaries that need to be involved and um how everything is done in a way that perfectly puts the documents together so that when you die the documents can be used to do what you want them to do oftentimes what will happen is a um person will do their will themselves uh they will not get it executed appropriately uh they will die the tru the will will be of no value and then people are extremely disappointed so i always caution do-it-yourselfers um that there are two steps to the process one is the drafting of the documents second is the formal execution of the documents um next question um do i offer virtual appointments or on-site visits yes it's not an or it's an and i do uh do virtual visits and uh what i would say is these are great for people who are uh not in their uh who are shut up shut in their home uh and or their schedule is such that they cannot get out but i will tell you face-to-face visits are the best and uh under uh appropriate circumstances i will travel to you and meet with you in your home because i truly believe the face-to-face visit is better than the virtual visit but yes all types are offered um and finally where can i contact you to set up a consultation well look at that right there in the lower third of the screen you see my telephone number a number that you can text i'm sure there is an email available that they'll put up and our address etc etc so um that is really the best way to contact our office i will tell you that when you call there is a high degree of likelihood you're going to meet stephanie she is amazing she answers the phone she will greet you and take in all of the necessary information to make sure that the office can do a proper evaluation of your situation she is going to be courteous and she definitely is going to care for you and what needs to be done um once you've spent that time with stephanie then we move to the formal consultation and that is our process and procedure here so i often recommend people to contact our office simply by a phone call or a text and you will get things started well i want to thank all of you for joining me here this morning it's been fun i cherish the opportunity to share this information with you and um uh if you ever have questions regarding any kind of estate planning wills trust uh probate somebody in your family has passed away please consider us as your resource and um you i invite you here again uh two weeks from now on facebook live notification you'll get notification you'll see um uh promotions leading up to the next topic and uh please it would be my honor if you would invite your friends and share this video with your friends families and other professionals um that is uh no greater of a thing than um that i could ask so i hope to see you again in a couple weeks and uh you have an awesome weekend god bless have a great day
