Should You Put Real Estate in an LLC in Connecticut? What I Tell Clients
This is one of those questions I get almost weekly:
“Should we put our house (or rental property) into an LLC?”
Sometimes the answer is yes.
Sometimes it’s absolutely not necessary.
And sometimes it makes things more complicated than they need to be.
If you own real estate in Connecticut — especially in Fairfield County — and are thinking about liability protection, privacy, or long-term planning for your family, it’s worth understanding how LLC ownership actually works and when it makes sense.
Why people consider using an LLC for real estate
There’s a reason this comes up so often. LLCs can be a really useful tool when used for the right property and the right purpose.
Liability protection
This is usually the main driver.
If a rental property or second home is owned by an LLC and someone is injured on the property, generally speaking the liability stays inside the LLC. Your personal assets are less likely to be exposed — assuming you’ve maintained the LLC properly and have appropriate insurance in place.
For clients who:
own rental properties
have a vacation home used by others
or simply have higher personal liability exposure
…it’s often worth considering.
Privacy
Connecticut land records are public. Anyone can search them.
When property is owned individually or even in a revocable trust, your name is on the deed. Holding title through an LLC can provide an extra layer of privacy by keeping your personal name off the land records. It’s not perfect anonymity, but for many people it’s enough.
Easier long-term planning
From an estate planning standpoint, LLCs can make life easier — especially if this is a property you plan to keep in the family.
Instead of transferring pieces of real estate over time, you can transfer membership interests in the LLC. That can simplify gifting, allow for shared ownership among children later, and make management more centralized.
If you own multiple properties or are thinking generationally, this flexibility can be helpful.
Keeping properties separate
If you own more than one investment property, it’s often wise not to lump everything together.
Many clients create a separate LLC for each property so that a problem with one doesn’t affect the others. It’s not required, but it’s something we talk through.
How you actually put property into an LLC in Connecticut
The mechanics are straightforward, but the details matter.
Step 1: Form the LLC
This means filing with the Connecticut Secretary of the State and creating an operating agreement.
Even if you’re the only owner, an operating agreement is still important. It lays out how the LLC is managed and what happens if you become incapacitated or pass away — which ties directly into your estate plan.
Step 2: Transfer the deed
If you already own the property, a new deed needs to be prepared transferring ownership to the LLC and recorded with the town where the property is located.
Before doing this, always check your mortgage.
Many mortgages have due-on-sale clauses, and some lenders do not allow transfers to LLCs without consent. This is a conversation to have before anything is signed.
Step 3: Update insurance and logistics
Once the LLC owns the property:
The insurance policy should reflect the LLC as owner
An umbrella policy should be reviewed
The LLC should have its own bank account
Rent or expenses should flow through that account
This is the part people often overlook, but it’s critical if you want the liability protection to actually hold up.
Connecticut-specific issues people don’t always realize
Financing can be more complicated
Residential lenders prefer lending to individuals, not LLCs.
Often clients buy property in their individual name and transfer it later (with lender approval), or use lenders familiar with investment property ownership structures.
Out-of-state owners still face CT estate tax
If you live outside Connecticut but own Connecticut real estate through an LLC, that property may still be subject to Connecticut estate tax.
This surprises a lot of people. If you’re not a Connecticut resident but own property here, it’s worth planning carefully.
You have to respect the LLC as a separate entity
An LLC only works if you treat it like a real entity.
That means:
separate bank account
no mixing personal and property funds
signing leases and contracts in the LLC’s name
filing the annual report with the state
If everything is handled casually, the liability protection can fall apart.
When an LLC makes sense — and when it doesn’t
In my practice, an LLC is usually worth exploring if:
the property is a rental or investment property
it’s a second home used by multiple people
you want added privacy
you have meaningful personal liability exposure
you’re building a real estate portfolio
It’s often unnecessary if:
it’s your primary residence
liability risk is low
insurance coverage is already strong
the mortgage makes transfer difficult
simplicity is the priority
For a primary home, a revocable trust is often the better estate planning tool. Different goal, different structure.
The biggest misconception I see
An LLC is not an estate plan.
It can be a very helpful piece of one, but it should be coordinated with your revocable trust, insurance, and overall planning strategy.
In many cases, the cleanest structure looks like this:
Property owned by LLC → LLC owned by your revocable trust
That gives you liability protection, probate avoidance, and continuity if something happens to you — without unnecessary complexity.
Final thoughts
There’s no universal right answer here.
Putting real estate into an LLC can be smart, but only when it’s done thoughtfully and for the right reasons. The decision should always be made in the context of your broader estate plan and long-term goals.
If you own property in Connecticut and are trying to figure out the best structure, it’s worth getting advice before moving anything around. Cleaning it up later is always more complicated than setting it up properly from the start.
Ready to make sure you’ve got the right structure for your needs? Let's schedule a Planning Session and knock this out together. Schedule a Consultation
The Law Office of Elizabeth Roache
Strategic Estate & Legacy Planning
Serving families in Wilton, Westport, New Canaan, Darien, Ridgefield, and throughout Fairfield County
