How to Protect Your US Property While Living Abroad

The joys and responsibilities of owning real estate in the U.S.

You’ve done well to achieve success and own a home or one or more rental properties in the U.S. But if you spend any significant time here in Thailand or anywhere overseas, then I’m sure you’ve thought about how to best manage your property, protect it from lawsuits or other liabilities while you’re out of the country, or how you’ll pass on your property upon your death or loss of capacity.

These are very real issues that every U.S. expat property owner faces.

I’m an American estate planning and corporate attorney based out of San Francisco, but I also spend quite a bit of time here in Thailand and understand these issues firsthand. I want to give you five tips that can help protect your U.S. estate assets through sound legal estate planning.

Now, tip number one is to consider setting up a limited liability company, or LLC, to hold your rental property. This is a great way to protect yourself in the event that you’re sued. While it may not prevent a lawsuit, it can limit your liability to only the assets held inside the LLC and help protect your other assets, such as your primary residence or personal financial accounts.

A properly structured LLC can also provide an added level of privacy. The key words here are “properly structured” and “properly managed.” What I mean is that you want to make sure the LLC is run like a real company, with proper accounting practices and separate LLC bank accounts that do not commingle with your personal expenses.

Tip number two is setting up a revocable trust to hold the LLC ownership. This allows you to avoid the expensive and time-consuming probate process when you pass away. It can even protect your assets from Medi-Cal estate recovery by the government.

Another time- and expense-saving tip I can give you is to set up the trust before purchasing the property, as this allows you to purchase the property directly in the name of the trust.

Tip number three is to inform the title company and lender in advance that you intend to take title to the property in the name of the trust. Some banks will want the borrower to be named directly on the mortgage, and that’s fine. You can have the mortgage documents in the borrower’s individual name, but the recorded deed should show the revocable trust as the owner of the property.

Tip number four is for those of you who currently own property in community property states such as California and Texas. Check your current deed to see how title is held. In California, for instance, if you or your spouse bought the property before 2001, there’s a good chance you’re holding the property as joint tenants.

If so, you may be missing out on a major tax benefit available to married couples who hold real property as community property while both spouses are alive. This can often be changed fairly easily to take advantage of that tax benefit.

Tip number five is that under California law, mortgage lenders, banks, and financial institutions are not allowed to demand a copy of your trust, which is a private document. They do not need to know how or to whom you plan to leave your property.

Instead, you can provide a certification of trust, which contains only limited necessary information. This is something I prepare when putting together an estate plan.

Now, everyone’s circumstances are different, and I’m providing information here, not legal advice. If you own property or other assets in the U.S. and would like more information, I’d be happy to offer a free consultation, which you can schedule by clicking the link below.

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