Why your LLC isn’t enough: The 3-layer estate plan every Georgia landlord needs
If you own rental property in Georgia, you need more than an LLC. The best estate plan for landlords has three layers that work together: an LLC for liability protection, a trust to protect your assets from probate, and an umbrella insurance policy as your financial backstop. This article explains how each layer works, why you need all three, and how to set them up correctly.
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The #1 misconception I see from property owners
After more than a decade of estate planning work in Georgia, the single most common misconception I hear from rental property owners goes something like this: “I have an LLC, so I’m covered… right?”
But here’s what I have to tell clients when they come in thinking their investment is protected: an LLC is a great first step, but it’s only one layer of a plan that needs three. Think of it like building a house and only putting up the frame; the structure is there, but you’re still exposed to the elements.
The good news is, the other two layers aren’t complicated or expensive to add. Here’s what a solid estate plan looks like.
The 3-layer estate plan for rental property owners
Layer 1: The LLC
The Limited Liability Company (LLC) is the foundation of any serious rental property strategy, and for good reason. Its core job is to legally separate your business assets from your personal ones.
Here’s what that means in practice: Imagine a tenant slips on your property, sues, and wins a judgment. If the property is held in your LLC, that lawsuit is generally limited to the assets owned by the LLC—not your personal bank accounts, your primary home, or your kids’ college savings fund.
The LLC acts as a legal wall between your business and personal lives.
What Georgia property owners need to know:
- Each property (or group of properties) should have its own LLC. If you own three rental properties under one LLC and one of them generates a major lawsuit, all three are potentially at risk. Separating them creates individual firewalls.
- You must maintain the LLC properly. This means keeping separate bank accounts, not commingling personal and business funds, filing annual reports with the Georgia Secretary of State, and keeping clean records. If you fail to do this, a plaintiff’s attorney can argue your LLC is just a shell. This is a legal strategy called “piercing the corporate veil,” and it could leave your personal assets exposed.
- An LLC does not protect you from your own negligence. If you personally caused harm, an LLC won’t shield you.
Bottom line: The LLC limits who can be sued and what assets are reachable. But it does nothing for what happens to those assets when you die, which is where Layer 2 comes in.
Layer 2: The trust
This is the layer most property owners don’t think about until it’s too late. When you pass away, any asset held in your personal name has to go through probate, a court-supervised process that is public, slow, and often expensive. In Georgia, probate can take anywhere from several months to over a year, depending on the complexity of the estate and whether any disputes arise.
Your family is essentially waiting on a judge to give them permission to receive what you intended them to have all along.
A properly structured Revocable Living Trust solves this entirely.
Here’s how the ownership structure works when you combine a trust with your LLC:
You (during your lifetime)
↓ controls
The trust
↓ owns
The LLC
↓ owns
The rental property
By having your trust own your LLC (rather than you personally owning the LLC), property passes to your beneficiaries outside of probate automatically and privately, according to your exact instructions. Your heirs don’t have to wait, and no judge has to sign off on anything.
Additional benefits of putting rental property in a trust:
- Incapacity planning: If you’re in an accident or become medically incapacitated, your successor trustee can step in and manage your properties immediately without court intervention. Without a trust, a judge would need to appoint a guardian or conservator, which takes time and money your family may not have.
- Minor children: If you have children, a trust lets you specify exactly how and when they receive their inheritance. You might want assets managed for them until they reach age 25, or distributed in stages. Without a trust, Georgia law generally requires a custodian to hold assets for minor heirs, with much less flexibility in how those assets are managed.
- Control: You remain in control of the trust and all its assets during your lifetime, so nothing changes in your day-to-day property management. You can buy, sell, and refinance properties just as you would otherwise.
A word of warning: For the trust to work, your LLC interest (your membership interest) must actually be transferred into the trust. I can’t tell you how many clients come to me having set up a trust years ago without ever retitling their LLC. This is where working with an experienced estate planning attorney is so important.
Layer 3: The umbrella insurance policy
If you own rental property, this scenario has probably kept you up at night: a catastrophic accident occurs on one of your properties. Imagine that someone is seriously injured, and a judge awards over $1 million in damages. Your standard landlord policy only covers $500,000. You have an LLC in place, but the plaintiff’s attorney finds a procedural argument to challenge it.
Where does the other $500,000+ come from?
This is exactly what a personal umbrella insurance policy is designed to handle. An umbrella policy is additional liability coverage that kicks in after your primary policies (landlord policy, auto policy, homeowner’s policy) have been exhausted. It sits on top of everything else and provides a wider financial safety net.
Why this matters for rental property owners specifically:
- Landlords face additional liability risks. Slip-and-falls, dog bites, swimming pool accidents, carbon monoxide incidents…. The list of accidents that can happen without your supervision is long.
- Umbrella policies are surprisingly affordable relative to the coverage they provide. Often, the cost is just a few hundred dollars per year for significant added protection.
- Even a well-structured LLC can be challenged, so it’s not a silver bullet. Umbrella insurance ensures that even in a worst-case legal scenario, you have a financial buffer to protect your business reserves and prevent you from having to liquidate properties to satisfy a judgment.
How the 3-layer plan works to protect rental property
| Layer | Primary protection | Protects against |
| LLC | Legal separation of assets | Tenant lawsuits |
| Trust | Probate avoidance + inheritance control | Costly court process, probate delays, loss of control |
| Umbrella Policy | Financial backstop | Judgments exceeding primary insurance limits |
FAQ: Questions Georgia rental property owners ask about estate planning
Do I need a trust if I already have an LLC?
Yes. The LLC handles liability during your lifetime. The trust handles what happens to the LLC (and everything inside it) when you die or become incapacitated. They solve different problems and work best together.
Can I put all of my rental properties into one LLC?
You can, but it’s not generally advisable. Placing all of your rental properties in a single LLC means a lawsuit involving one property could potentially impact all properties in that LLC. It’s usually best to use a separate LLC per property or a parent/subsidiary LLC structure, depending on your portfolio size and goals.
What happens to my rental properties if I die without a trust?
They will go through probate. This means a court process, public records, potential delays that can take months, and added legal fees. If you have minor children, it also means a court will decide how their inheritance is managed until they reach adulthood.
Does my trust need to be updated when I buy a new property?
Not always, but your LLC membership interest for any new LLC should be titled in the name of the trust. This is something your estate planning attorney should track with you over time.
Can I set up an LLC myself without an attorney?
You can file Articles of Organization with the Georgia Secretary of State online, but the LLC itself is just the beginning. Critical details like the operating agreement, how membership interests are titled, how the LLC connects to your trust, and how it’s maintained over time are easy to get wrong without professional guidance.
What is “piercing the corporate veil”?
It’s a legal argument a plaintiff can make that your LLC is not a legitimate separate entity. This can happen if you’ve been sloppy about separating your personal and business finances, or if you haven’t kept proper records. If a court agrees, they can reach your personal assets even though you have an LLC. Proper formation and ongoing maintenance are essential.
Is an umbrella policy separate from my landlord insurance?
Yes. A landlord policy covers the property itself and has its own liability limits. An umbrella policy is a separate policy that provides an additional layer of liability coverage across multiple policies (your landlord policy, auto policy, etc.) once those primary limits are exhausted.
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