Estate Planning Mistakes Landlords Make

Most landlords spend years building a rental portfolio — and almost no time planning what happens to it when they're gone. Whether you have no estate plan in place or think you have everything handled, this episode may reveal a gap you didn't know existed.

In this episode of the Your Landlord Resource Podcast, Kevin and Stacie walk through the most common estate planning mistakes rental property owners make — many of which they discovered firsthand when creating their own living trust. From assuming a simple will is enough, to forgetting to fund the trust as your portfolio grows, to mismatched documents between spouses, this conversation covers the practical and emotional side of getting your estate plan right.

They also cover two estate planning tools that many landlords overlook entirely: Power of Attorney and the stepped-up basis tax rule — and they explain why having a Standard Operating Procedures manual is just as important as the legal documents themselves when it comes to protecting your rental business and the people you love.

LINKS & REFERENCES MENTIONED IN THIS EPISODE

Episode 6 – Standard Operating Procedures for Landlords

Power of Attorney Article – Your Landlord Resource

Property Management Software with Digital Lease and Tenant Records Management:

•      TurboTenant 

•      Innago 

•      Avail 

•      DoorLoop 

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Transcript

Introduction & Welcome

Kevin 0:00

A living trust doesn't just protect your assets when you die, it also protects you and your tenants if you become incapacitated while you're still alive. Think about a sudden illness, a serious accident, or a cognitive decline as you age. Any of those situations could leave you unable to manage your rental property business. And your tenants don't stop needing things just because you're in the hospital. Rent still needs to be collected, maintenance requests still come in, leases still expire and need to be renewed.

Stacie 0:37

And honestly, I think this is the part that makes people finally take action, because death feels far away for most of us, right? But any one of us could end up in a situation tomorrow where we simply cannot manage our own affairs.

Speaker 0:56

Welcome to Your Landlord Resource podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands-on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast-forward to today, Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire, all while building a streamlined and profitable rental property business. This is Your Landlord Resource Podcast.

Banter: Oral Surgery, Kevin's Virus, & Being Proactive

Stacie 1:45

Hey, landlords. Thanks for tuning in and listening to the Your Landlord Resource Podcast today. I'm your host, Stacie, and I'm here with my co-host, Kevin, who is recovering from a nasty chest cold. Hoping that all the talking we do today does not set you into a coughing fit.

Kevin 2:05

I, I'm doing much better now, but I'm gonna keep my finger on that mute button- just in case. And honestly, it was a very quiet house for the last week because not only was I down with this virus, but Stacie had oral surgery on the same day that I woke up with this.

Stacie 2:24

Yes, I did. And I am not a dentist person, so along with the anxiety that I had for this procedure, I woke up to Kevin telling me that he was sick with a fever and couldn't help me with a ride.

Kevin 2:38

Uh, I actually did feel really bad I couldn't help you.

Stacie 2:41

Oh, yeah. I'm sure you did. But I, I will say that w- where it's not your fault, I was not really happy about it. But I will also say that when I'm not well or if I'm in pain, I really just wanna be left alone, so the timing actually worked out. I don't think we spoke more than five to 10 minutes a day for, like, four days.

Kevin 3:04

Oh, oh, yeah, that was awful.

Stacie 3:07

Oh, wow.

Kevin 3:08

No, not really. I did feel bad that I couldn't do more for you, honestly.

Stacie 3:13

Yeah. Well, this one knocked me on my butt. I was in pain for well over a week and I could not eat anything, only soft foods, yogurt, soup, cottage cheese, protein shakes. But hey, yeah, I lost several pounds, so there's that.

Kevin 3:26

There's always an upside, right?

Stacie 3:28

Yeah. I, I, I try to always see the good in a crappy situation. So anyway, Kevin's virus aside, one thing that we did do was prepare for the time that I was gonna be taking off. We had made arrangements for Jim to do showings for us, made sure that our parents didn't have any appointments that we had to attend with them, because this was all gonna happen over the first of the month. We paid all the bills ahead of time and, in essence, we prepared for two weeks of downtime, much like when we go on vacation. And, you know, we say this often, but being proactive and preparing for uncertainty is something that we have learned to prioritize. One being was our living trusts. Now, I'm gonna be honest here, Kevin and I were married for about five years before we even began the process. And if you remember, at the time, Kevin owned farmland in North Dakota that was an investment property. Also at that time, I had a small share of my family's holdings in their rental properties, and I pretty much own my own home here in the Bay Area. So not an astronomical amount of assets, but enough that we felt that we should get a living trust set up just in case.

Kevin 4:46

Yeah. We both had separate assets that we brought into the marriage. But really what got us moving was when Stacie bought her family out of the rentals and became the sole owner of the LLC. Now, at that same time, I was looking into 1031 exchanging my farmland into rental property, which eventually came to fruition with the fourplex we own in Idaho. One thing I want to make clear here is that this process, the creation of the living trust, it was not easy, and it took quite a while to complete. There were a lot of emotions that come with doing a trust. You know, w- we kinda thought that all we had to do was give our attorney a list of all the assets, and then they would tell us how to structure the trust.

Stacie 5:34

Right. And I think I had a bit of a harder time than Kevin with the beginning stages. And if you do not have a good attorney, ask around to other people who you trust and see who they recommend. Take time to interview them to make sure that they will have your best interest in mind.

Kevin 5:54

And before we end here today, we'll give you some questions that you can ask your attorney about, whether you're revisiting an existing trust or creating a new one.

Stacie 6:04

Right. I think the bottom line is that creating a living trust is something we knew all along that we should do, but we just kept kicking the can down the road, and we kept putting it off. And I know we're not alone in this. And I was the one who pushed to get one done, but then when it came to answering the 10-page questionnaire that they gave us, that's when I started to drag my feet again because not one of my kids had reached the age of 30 yet. I mean, geez, I think the oldest was only 25. So there were decisions that we had to make about how the business was to be handled. And at that time I did not feel that my kids would be able to take on any of the assets as they stood at the time. It meant that we had to do a lot of contemplation about how things would be handled based on the timing of our deaths. And remember, we have the LLC, which is in my name only, plus the Idaho property that is in both of our names.

Kevin 7:05

And the thing that made us really ready to begin this process was that, yes, we had growing assets, but we also travel quite a bit. Our health was good, but you just don't know what could happen when. And being that Stacie thrives on being organized, it was important to make sure that the boys were properly taken care of, and our wishes were clearly outlined for them to follow. So today, we want to walk you through what our process looked like and where, if we had not had an attorney with ample real estate investment knowledge, we would have made some crucial mistakes that many others have made with their trusts.

Stacie 7:47

Correct. And also, in addition to our attorney, our CPA played a very important role in this process as well, because they provided a lot of information about how things would play out tax-wise with those assets that are in our trust. You know, you guys, we just want you all to go into this process with your eyes open. Maybe you already have a trust completed, maybe you're in the process, maybe you have only thought about getting it done. But regardless, today's episode is for all of you. We may just give you something to think about today that you did not know was an issue or even a possibility. And here comes the fun part, our disclaimer. We are not attorneys or CPAs. Everything we share with you today is based on our own experience and general education. Estate planning laws vary significantly by state. What applies in our state of California may not apply in yours. And things we discuss may no longer be applicable law, so please do not make any decisions based on our content. What you hear today is just information to inspire you on what you may be able to do or not do with your rentals after your death. So with all that, we ask you to please use this episode as a starting point and a motivation to sit down with a qualified estate planning attorney or even your CPA. And don't worry, we'll remind you of this a couple times throughout the episode because some of what we discuss gets into territory where professional guidance really matters.

Kevin 9:27

That's for sure. I think one thing that people don't realize is that this isn't just general estate planning. Rental property adds a layer of complexity most people don't anticipate. One being that real estate is an illiquid asset. That means that your heirs just can't cash it out overnight. Active leases and tenants don't pause when an owner dies. Someone has to step in immediately and take over management, not only of the actual physical property, but of the business as well. If there's no plan, then your estate will likely go into probate, which is slow, expensive, and public.

The Probate Problem

Stacie 10:10

So for those of you who may not know, probate is the court-supervised legal process of validating a will, paying debts, and transferring ownership of a deceased person's rental property to their heirs. It acts as a mandatory, often lengthy transfer mechanism for properties held in the deceased name alone, requiring a court-appointed executor to manage rent, maintenance, and tenants. That court-appointed executor could be a property management company that the courts work with, or it could be one of the heirs. Which means the people who you love most may be left managing something they have no idea how to operate. Or it may be handed to a property manager who may or may not do a good job running the business, and likely they will do that job for a very significant fee.

Kevin 11:07

Absolutely right.

Incapacity Planning

Kevin 11:10

And here is something that people don't always think about when it comes to estate planning. A living trust doesn't just protect your assets when you die, it also protects you and your tenants if you become incapacitated while you're still alive. Think about a sudden illness, a serious accident, or a cognitive decline as you age. Any of those situations could leave you unable to manage your rental property business. And your tenants don't stop needing things just because you're in the hospital. Rent still needs to be collected, maintenance requests still come in, leases still expire and need to be renewed. A properly structured trust names a successor trustee who can step in immediately to handle all of this on your behalf. Without that, your family may have to go to court to get legal authority to act for you, and that takes time, time that your rental business just doesn't have.

Stacie 12:12

And honestly, I think this is the part that makes people finally take action, because death feels far away for most of us, right? But any one of us could end up in a situation tomorrow where we simply cannot manage our own affairs. So if you've been putting this off, let this be your motivation.

Power of Attorney - The Document Landlords Forget

Stacie 12:33

And while we're on the subject of incapacity, there's another document that works hand-in-hand with your living trust that we have not mentioned yet, and that is a power of attorney. Now, a lot of people confuse this with a trust or assume that their trust covers everything, but they actually serve different purposes. Your living trust controls what happens to your assets. A power of attorney gives someone legal authority for someone to act on your behalf while you're still alive but unable to manage your own affairs. Think of it as the document that keeps your rental business running in real time during a crisis.

Kevin 13:12

Right.

Who Should Be Your POA Agent?

Kevin 13:13

And the person you name in your power of attorney is called your agent. Now, most people default to naming a spouse or an adult child, and that makes sense for a lot of decisions. But for rental property owners, there is a strong argument for naming someone with actual real estate or property management experience. Because your agent may need to collect rent, handle maintenance, deal with tenants, and make financial decisions about your properties. This is a lot to ask of someone who's never managed a rental in their life.

Stacie 13:50

Yeah, exactly. And here's something that ties directly into what we said earlier about funding your trust. If you become incapacitated before you have finished transferring all of your properties into the trust, your power of attorney agent can actually complete those transfers on your behalf, but only if the power of attorney is already in place before something happens. If it's not, those assets that never made it into the trust may end up in probate. So it really is a safety net basically for your safety net.

Kevin 14:25

And one more thing worth mentioning, your agent is entitled to be reimbursed for reasonable costs that occur while managing your affairs. So if you are naming a family member or close friend, have that conversation with them upfront. Make sure they understand what they are agreeing to and that there is a process for them to be compensated for their time and expenses. That way, there's no surprises.

Stacie 14:52

Yeah, exactly. And of course, this is a conversation to have with your estate planning attorney as well. They will draft the power of attorney as part of your overall estate planning package, so make sure you ask about it if they don't bring it up first.

Kevin 15:07

All of this is especially true if you're a self-managing landlord. Your systems, your tenant relationships, your processes may live mostly in your head. Now, we have done episodes on ways to prepare for this by creating standard operating procedures. We discuss it in episode six, and we have a blog all about it also. We will link those in the show notes for you to check out. But they are a very important step to take in being a responsible rental property owner.

Mistake: Assuming a Will is Enough

Kevin 15:39

All right, you guys, let's get to the mistakes many landlords make when considering how they want to pass their rental properties on after their death. The first thing, and we've seen this before with many of our older clients, is thinking that a simple will is enough. Now, many of us have started out with a will and then plan to work on the trust part later. The problem is when you never actually get to the trust part and assume you're all covered because you have a will in place. In most states, a will alone does not keep real property out of probate. Now, a will does tell the court what you want, but it still means the court has to supervise the process.

Stacie 16:22

Yeah, I think this is surprising to a lot of people.

Kevin 16:24

Oh, yeah, for sure. I mean, we didn't realize this was an issue either. When we sat down with our attorney, they explained that a will is a significant part of developing a living trust, that a will can stand on its own, but that it is no longer being recommended. Hence, why you often hear people addressing it as a will and trust.

Stacie 16:50

And of course, we recommend you have a conversation with your attorney about this, because we were a little bit confused at first. He said we had to sign documents for our will and then do our trust. So the will was in place while we went through the long and sometimes emotional process of creating the living trust segment. If you already have a will in place, ask your attorney if your current documents are good enough to keep your properties out of probate.

The Pour Over Will - Your Safety Net's Safety Net

Kevin 17:18

And while we're on the subject of wills, there is one more document worth mentioning here, and that's called a pour-over will. Now, don't let the name confuse you, a pour-over will is essentially a safety net document. It's written alongside your living trust, and its job is to catch any assets that you forgot to transfer into your trust or that somehow ended up outside of it. So if you acquired a property and never got around to retitling it into your trust, the pour-over will essentially says, "Hey, whatever is left over that is not already in the trust, pour it in upon my death."

Stacie 18:02

Yeah. Now, a pour-over will does not avoid probate for those assets. They would still likely need to go through probate before landing in the trust. So it's not a substitute for keeping your trust properly funded, but, you know, it is a backstop. And many people who have a living trust also have a pour-over will without even realizing it, because their attorney just automatically drafted one as part of the package. So if you're not sure whether you have one, this is a great question to ask.

Mistake: Not Funding Your Trust as Portfolio Grows

Stacie 18:34

Okay, the next issue is many people do not fund their trust. They're smart, and they get one done early on in their lives, you know, when they get married and they buy a house or have kids, and that's all great. But as time goes on, maybe they buy a second home, or in the case of what we're discussing today, they begin to invest in rental property. And this is where I need you to listen up. So if you're out there multitasking, come on back to me. A revocable living trust is one of the most common tools used to transfer property outside of probate. But the trust only controls what's actually been transferred into it. So let me repeat that. The trust only controls the assets that have actually been transferred into it. If you created a trust five years ago and never retitled your properties into it- the trust may not cover those properties at all. The same thing goes for properties acquired after the trust was created. Any new properties need to be actively titled into the trust. Now, there is verbiage that your attorney can use to assume this for all future properties, but it's not always common practice for them to do that. For landlords still growing their portfolio, this is especially relevant.

Kevin 19:57

So this is something you would need to include in your conversation with your attorney when developing your trust.

Mistake: Mismatched Trust Documents Between Spouses

Kevin 20:04

Now, I want to discuss something that not many households do, and that is that each spouse has their separate wishes as to how the estate is to be handled upon their deaths. It's not necessarily a mistake, but it is something that comes up more often than you'd imagine and can really complicate the execution of the trust. We know of a couple, they're older, who have different ideas on how their estate is to be handled depending on who passes last. One spouse's trust directs that everything be liquidated and divided upon death. So sell it all and whatever cash you get from it gets divided upon all of the named heirs. The other spouse's trust specifies which heir gets what asset, or in this case, the rental property. Now, neither of these is wrong on their own, but together they can create a lot of confusion. Plus, you can only guess that there's going to be potential for conflict and outcomes that neither spouse fully intended.

Stacie 21:09

Yeah. So much so that this couple had to find an outside person to act as their trustee of their estate and not use an actual heir. Again, nothing wrong with that, but they felt that if the spouse with the specified division of assets passes last, the heirs would not be happy with the outcome. And to avoid there being a huge family fight over it, they assigned the responsibility to an outside trustee for them to take the brunt of it. So you guys, the lesson here is that estate plans between spouses need to be reviewed together and with a shared understanding of intent.

The Floozy Factor - Why Stacie Protected Pre-Kevin Assets

Stacie 21:52

And full transparency here, Kevin and I, we have two trusts. One is for the property that I owned prior to him coming into the relationship, which will be deeded to my children. The other is for property that we own together. And the thing is, all of our property goes to the boys regardless. But if I pass before Kevin, there were certain assets that I wanted the boys to have control of. Kevin gets all the assets we purchase together and can sell them or do whatever to make his livelihood work. If I give all of the assets to him, and he meets some floozy who comes in and steals all his money, then the boys are left with nothing. So my intent was to protect the assets that I owned before Kevin came into the picture.

Kevin 22:41

And the thing is, you guys, I totally get it. Except for the fact I would never pick a floozy- and have them steal all of my money.- However, we know multiple people who, when one parent passed, the other parent fell in love with one of their nurses or someone in their retirement home or care facility, and then left their assets to that person, not their children.

Stacie 23:06

Yeah, and one of those was an immediate family member of mine. And you guys, it was heartbreaking to watch. It also happened to a close friend as well, so don't think that this can't happen to you. I think the takeaway here is really two things. One, make sure you and your spouse have actually sat down together and talked through what you each want. And don't assume that you're on the same page, because Kevin and I, we're very aligned in our goals, but we still had things come up in the process that surprised each other.

Having Hard Conversations With Your Heirs

Stacie 23:40

And two, the conversation matters just as much as the document. Your attorney can write a beautifully structured trust, but if the reasoning behind your decisions is not communicated to the people who will be affected by it, you are leaving a lot of room for hurt feelings and conflict at an already incredibly hard time.

Kevin 24:01

Yep. The document is the legal framework, but the conversation is what keeps your family intact throughout the process. And if you're not sure how to start that conversation with your spouse or your heirs, using the estate planning process itself as the reason to sit down together is a completely valid approach. Just say something like, "Hey, we need to get our trust updated, and I want us to talk through how we want things handled." That is a lot easier than trying to have the conversation completely out of nowhere.

Stacie 24:36

And the thing is, it was these kinds of conversations that Kevin and I needed to have. You know, they were not fun. But after we had both aired our concerns, we felt much better about how to move forward. It was a lot of give and take, and we, you know, do have a plan in place. Now, whether that plan comes to fruition, who knows, but we have a plan.

Kevin 25:01

Let me chime in here for a second. Yes, we have a plan, and as best we could, we have shared this plan with the boys. You know, they're grown men, but they've already lost their biological dad, and the discussion of death is not an easy one for them to have. They appreciated that we have a plan in place and said they'll address it when the time comes, but who knows when that will be and if there will be time for us to discuss it again. So we have also shared our plan with a close family friend, of course our attorney knows, and I believe we've also discussed a more shortened version with our parents. Because our combined estate will have a value in the millions, we felt it was important that certain people, who the boys may lean on for support, understand our wishes so that they can guide them should that time come sooner rather than later.

Stacie 25:56

Yeah. And again, not easy conversations to have. And I will say it seemed that when we were doing this, we got a lot of, "Yeah, yeah, okay, we understand." So whether they retain the information from the conversation is beyond me, but we did try, and it's all written down, but the reasoning behind the decisions are not in the trust, and that is what we were trying to convey.

Mistake: Not Accounting for How Property is Titled

Stacie 26:24

All right, let's move on. A lot of rental property owners do not account for how their property is titled, because how it's titled can override everything else, including your trust and your will. Joint tenancy, tenancy in common, sole ownership, LLC ownership, each one of those carries a different implication for what happens next. If your property is held in an LLC, who inherits the LLC membership interest? Is that addressed in your plan? If you had a trust written before and then created your LLC, it is likely it is not correctly addressed. And we'll say it again, this is something your attorney needs to know. So bring a list of exactly how your properties are titled and ask your attorney if your current documents address each one correctly.

Kevin 27:15

Yeah, and right now we're in the process of having my parents' trust revisited. I think it's been, like, what? 20, 25 years or more since it was originally written. So you can only imagine the changes in laws and their own assets that have happened in that time.

Stacie 27:32

Yeah, my understanding is it will need to be completely redone. And

What is a Successor Trustee - and Are They Ready

Stacie 27:37

before we move on, I want to circle back for a moment and explain what a successor trustee actually is, because that term will come up and I want to make sure that everyone's clear on it. A successor trustee is the person or entity who steps in to manage and distribute your trust assets when you pass away or become incapacitated. Think of them as the person holding the keys to everything you have built. Now, we mentioned earlier that for most people, this is a spouse, an adult child, or a trusted family member. But here's what people don't always consider. For rental property owners, your successor trustee is not just signing paperwork and writing checks. They're going to be dealing with your tenants, responding to maintenance calls, paying mortgages and utilities, and potentially overseeing the sale of a property. So the question is not just who do you trust, it is who do you trust and who is actually capable of handling this.

Kevin 28:36

Right, and that is a conversation worth having with whomever you are naming before you name them, because it's really not fair to drop that responsibility on someone without making sure they understand what they're agreeing to. Some people choose to name a professional trustee or a trust company instead of a family member, especially if the heirs are not local, not financially savvy, or if there's potential for family conflict. There is a cost for that, but for some situations it's absolutely the right call. Which is also why naming an outside trustee, like the couple we mentioned earlier, is sometimes the smartest move in the room.

Mistake: Forgetting the Stepped Up in Basis Tax Rule

Kevin 29:21

All right, let's move to the next thing many people do, and that is forgetting about the stepped-up in basis tax rule. Now, this is not going to be a deep dive into inheritance taxation laws. I just want to cover the basic and the core idea of it. So when heirs inherit property, they typically receive a new cost basis at the property's fair market value at the time of death. The term for this is called stepped-up in basis. And it can dramatically reduce, or in some cases even eliminate capital gains taxes should their heirs decide to sell. The mistake comes when rental property owners gift their rental property during their lifetime. Now, I know this may appear to be very generous, but what they are doing is handing their heirs a significant tax burden along with the asset. You can hand management over to them, and you can pay them to manage the property if you are wanting to grant them some income, but it is really not advised to transfer title to an heir before your death, but rather allow them to use this stepped-up in basis tax rule for inherited property.

Stacie 30:39

Now, I do want to add a little disclaimer here. This is a situation you absolutely want to discuss with your CPA. We are just giving you some information so that at minimum, you know this concept exists before you make decisions about transferring property while you're alive.

The 8 Unit Apartment Building Story

Stacie 30:58

And I have a little story to help you understand the stepped-up in basis tax rule. A few years ago, I assisted a girlfriend and her sisters as their Realtor to sell their mom's eight-unit apartment building. When the mom had passed, the stepdad was still living in one of the properties, so they decided to wait to sell everything. But they were smart, and they got a property appraisal done upon her death. That set the value of their inherited property. And this particular apartment building was appraised quite high for the area. And because they decided to wait until the stepdad passed to sell the property, they held all those properties for a few years. In this case, it worked in their favor because they sold the apartment building for less than the appraised value and did not have to pay one penny of capital gains tax.

Kevin 31:52

Yeah, they appraised it when the market was booming, which worked to their advantage. Then the market softened a little, and it helped on the tax end.

Stacie 32:02

Yeah, and I think the difference was only a couple hundred thousand dollars, so capital gains tax wouldn't have been a ton, but regardless, hey, good for them. All right,

Mistake: No Operational Handoff Plan

Stacie 32:12

so we touched on this a little while ago, but another mistake that most self-managing landlords make is not having an operational handoff plan. Now, this is something that is not gonna come up in general estate planning conversations, because your estate plan may legally transfer the property, but who knows how to run it? Where are the leases? What bank are the security deposits held? Who are the vendors to call if there's a maintenance issue? How are the rents received? What are the amounts, and when are they due? What is the process if someone doesn't pay their rent? And believe you me, when an owner dies, tenants will take advantage and not send in their rent payments. We actually know someone who did this. The question is, if you died tomorrow, could your successor trustee or executor or heir step in and operate your rentals without any chaos? This is where the operational binder, or as we call it, our standard operating procedure manual, also known as SOPs, come into play. It becomes an act of love for your family, not just a business tool.

SOP Callback - Episode 6 & Our Landlord Binder

Kevin 33:25

Again, we did a podcast episode all about this called Standard Operating Procedures for Landlords. It's episode six, and you can listen to it by going to yourlandlordresource.com episode6. That podcast episode is one of our most downloaded episodes for a reason, you guys.

Stacie 33:46

Yeah. The one thing to know is that the estate planning process goes hand in hand with building or updating your SOPs. At minimum, make sure somewhere you have a master document that is updated at least once a year. And it should include for each rental property that you own, tenants' names, lease terms, rent amounts, and where the master leases are located with passwords if it's held online. You want vendor contacts, so they need to know your plumber, your electrician, your handyman, all of them. And your banking information for the general bank account and the security deposits. Again, if you use online banking, they're gonna need to know the passwords for that, or at least know where to find those passwords.

Kevin 34:33

And if you're gonna lock those master binders up, make sure they know where the key is or where the lock code is to open the cabinet.

Stacie 34:42

And

Turbo Tenant & Kid 2 Fishing Story

Stacie 34:43

I'll say if you're using a property management platform like TurboTenant, you're already ahead of the game. Your lease documents, your tenant information, and your payment records are stored digitally in one place, which makes it so much easier for a successor trustee or an heir to step in and find what they need. If you're not already using a platform like that, we're gonna put a few links in the show notes of ones that we recommend so you can check them out. For most software, you can add a user pretty easily. Like Kid Two uses TurboTenant and added me on as a user so that I can assist him when needed. Just recently, he took a week-long fishing trip to Alaska, so he texted his tenants that if there were any issues just to call me, and because I'm already authorized on his TurboTenant account, had anything happened to him, I could handle things immediately.

Kevin 35:34

Right. Good catch there.

Stacie 35:36

I see what you did there. Good catch. He was fishing. Nice pun, Kev.

Kevin 35:43

I didn't even mean to do that. Well, that shows you I can be funny without even trying. All right, enough joking. This is a very serious matter. Okay.

Mistake: Creating a Plan and Never Revisiting It

Kevin 35:57

Now, as mentioned earlier, we're getting ready to assist my parents with revisiting their trust, and that is another mistake many, many people make, regardless of if they own rentals or not. People create their trust plan and then they never go back to it.

Considerations to See If You Should Revisit Your Trust

Kevin 36:16

An estate plan is not just a one-time set it and forget it event. Life changes, right? And your plan needs to keep up. So consider the following to see if you need to revisit your trust. Have you acquired new properties after the trust was created? Have there been any changes in family dynamics like divorce, death of a named heir, or some estrangement? Are you aware of any tax law changes that affect estate and inheritance strategy? Have you moved to a different state with different laws? The general recommendation is to review your plan every three to five years or after any major life or financial change.

Stacie 37:01

Correct. When my brother passed, some changes had to be made to my parents' trust. And for your parents who did their estate planning well before I was even in the picture, likely they're gonna find that there definitely has been some tax law changes.

Questions to Ask Your Estate Planning Attorney

Stacie 37:19

All right, before we wrap this up, we promised you at the beginning of the episode that we would provide you with a few questions to ask your estate planning attorney. Now, you can write them down, or we can include them in the show notes that are on our website. Now, we can't put them on the Apple show notes or the Spotify or any of the, like YouTube or anything like that. We can only include them on our personal webpage. And that can be found at yourlandlordresource.com/episode126, and we'll also put the link in the show notes as well. You can go onto our page, and you can screenshot them or cut and paste them onto your own note-taking software like Word or something. Kev, why don't you do the questions, and then I'll close out the episode.

Kevin 38:06

No problemo. Okay, so whether you are starting completely from scratch or you're revisiting a trust that has been sitting in a drawer for years, here are some questions to bring to your estate planning attorney. These apply to both situations, so do not tune out if you already have something in place. Does my current plan keep my rental properties out of probate? Or if you do not have a plan in place, ask what you need to do to ensure that your rental properties will not end up in probate. Are all of my properties properly titled to enter them into my trust, including ones I've acquired recently? Because how they are titled makes a huge difference on how they are handled when you die or become incapacitated. If my properties are in an LLC, how do I determine how to divide my membership interest, or does my current plan address who inherits the LLC membership interest? Do my spouse's documents and my documents work together the way we intend? Meaning, are you both on the same page, or will you have a need for separate wills and trusts? What are the implications of gifting property now versus passing it at death? Then we're talking about the stepped-up in basis rule. And this is something you might want your CPA to chime in on as well. When we did our trust, we had to pay for one meeting between both the attorney and the CPA, so tax-wise, we were setting everything up correctly. Who is my successor trustee, and do they understand what managing rental property actually involve? Now, this is not necessarily a question for the attorney unless you have no one who you personally know who can act as your successor trustee. Remember the couple we discussed before? They placed an outside trustee to act instead of one of their heirs. And finally, how often should we review and update this plan? Now, this will depend on where you live and how often you're changing assets. If you're in the early stages of building your rental property business, you may need to revisit it every couple of years. If you're a little older and everything is in place and you don't anticipate adding or selling any properties, you might be able to wait, like, five to seven years. And your attorney is the one who can best recommend that timeline.

Stacie 40:42

Yeah, and plus, consider the cost of revisiting that because it adds up fast, so be strategic about it.

Taking Action Regarding Estate Planning

Stacie 40:49

All right, you guys. Now, I know this topic seems really heavy, but taking action is an act of care for the people that you love and the business that you're working hard to build. If you can just do two things, ask someone that you trust for a referral to an attorney that does estate planning. You want to make sure they absolutely understand real estate investing and rental properties. And then take that step to schedule the consultation. Also, start to jot down notes for your standard operating procedures or your SOPs. If you need some guidance on how to do this, listen to episode six because having that operational clarity is part of your real estate plan preparation.

Closing

Stacie 41:35

All right, so that is our show for today. Thank you so much for taking time out of your busy schedule to listen to what we have to say about self-managing your rental properties. We are very grateful and humbled to be able to share what we know to help you along in your journey. Of course, we hope you enjoyed this episode and got some useful information out of it. And if you wouldn't mind helping us out, we would really appreciate you leaving us a kind review or sharing the podcast with another landlord you may know. If you want to hear more, follow or subscribe to the podcast so each week the episodes are downloaded right to your favorite podcast platform. And we'd love to stay in contact with you. If you have a question or you wanna suggest a subject for our podcast, you can text us at 650-489-4447 or email us at stacie@yourlandlordresource.com. That's Stacie with an I-E or kevin@yourlandlordresource.com and we'll link all that in the show notes as well. Also in the show notes, you can find links to the downloads we offer, ways to sign up for our free newsletter, links to our private Facebook group that's just for landlords, all our social media accounts. I think that's about it. Thanks again and until next time, you've got this, landlords.