Liked your article on LLCs
My wife and I own a home and want to build a granny house on our land (California). We don’t need the rental income, but our daughter’s do. We’d like to have the house managed under some kind of trust or LLC where they are the managers and they collect the rent, and they pay taxes on their profits (not us). Is that possible? How would we do it? I can’t split the property. The main house is ours (and jointly owned with our two daughters), but the granny house rental unit would be run exclusively by them. What am I looking for? An LLC, a simple business license, or what?
Thanks for checking out our article on LLCs and for your question above. Your desire to insulate your liability in this project is understandable, as is your hope to avoid splitting parcels. There are a few options that might work for you.
One option would be to transfer title to your home into an LLC. You can then build your granny house and let your daughters, through the LLC, rent the granny house for income.
Another option that would insulate you further would be to transfer your home into a holding company LLC, construct the granny house, and then sign a management agreement with your daughters for them to manage that particular property. That way, if something happened between one of your daughters’ tenants and them as property managers, you would have less personal exposure to any potential liability.
Hope this helps. For more information on how to structure this project to protect yourself and your daughters, you may want to consider consulting with a local business or real estate attorney.