Method 1 — A Will: The Most Expensive Way to Pass Rental Property
A will does not keep your rental properties out of court. It is the document that sends them there. When you leave property through a will in Georgia, the will has to be proven in probate before anyone can take ownership. For a rental portfolio, that process runs 12 to 18 months from the day you die.
During that time the property is frozen inside the estate. Your executor collects the rent, pays the mortgage, and handles repairs, but no child can be added to the deed until the case closes. If a tenant stops paying or the roof fails in month three, the family is making decisions through a court-supervised estate instead of owning the building outright.
Probate also carries a price tag. Under Georgia law, an executor is entitled to a commission of 2.5% of everything the estate receives and 2.5% of everything it pays out (O.C.G.A. § 53-6-60). On a rental estate where money moves in and out every month, those commissions add up fast, and they come straight out of what your children inherit.
The deeper problem is control. A will hands everything to your heirs the moment probate ends. If one child is 22, or in a rough marriage, or bad with money, the will gives them a share of a rental building with no guardrails. A will can be perfectly valid and still leave your family exposed. For a side-by-side look at how the two documents differ, see our guide on the difference between a will and a trust in Georgia.
Method 2 — Giving Property to Your Children Now: The Step-Up Basis Trap
Handing the rental to your children while you are alive feels like the clean fix. The property leaves your name, it skips probate, and you get to watch them take over. But a lifetime gift creates a tax problem most Georgia parents never see coming, and by the time it shows up, it cannot be undone.
Here is the trap. When you give property away during your life, your children take your original cost basis, not the current value. This is called carryover basis, and it is set by IRC § 1015(a). Whatever you paid for the building years ago becomes their basis too.
Say a couple in DeKalb County bought a rental in 2005 for $150,000, and it is worth $500,000 today. If they gift it to their daughter now, her basis stays at $150,000. The day she sells for $500,000, she owes capital gains tax on the full $350,000 of growth.
Now compare that to inheriting the same property. At your death, the basis resets to the full market value on your date of death. This is the step-up in basis under IRC § 1014. Your daughter’s basis becomes $500,000, and if she sells right away she owes almost nothing.
The gift did not save the family money. It manufactured a tax bill of more than $70,000 that a trust would have erased. Federal capital gains tax at 15% on $350,000 is $52,500, and Georgia income tax adds thousands more on top.
A gift also collides with long-term care planning. Giving property away starts the 60-month Medicaid lookback under 42 U.S.C. § 1396p(c). If either parent needs nursing home care within five years of the gift, Georgia Medicaid treats the transfer as a penalty and can delay coverage for months.
The annual gift exclusion does not rescue this plan either. In 2026 you can give $19,000 per person each year without filing a gift tax return, but a $500,000 building blows past that in a single transfer. You either file a gift tax return or spend decades deeding tiny fractions of the property, and the basis trap stays in place the whole time.
Method 3 — A Revocable Trust: The Recommended Starting Point
A revocable living trust solves every problem the will and the gift create. You move your rental properties into a revocable living trust while you are alive, you stay in full control as the trustee, and nothing about your day-to-day ownership changes. You collect rent, refinance, and sell exactly as before.
The difference shows up when you die or can no longer manage the properties. The person you named as successor trustee steps in immediately, with no court case and no waiting period. The rentals keep running, the tenants never know anything changed, and your children skip the 18-month probate entirely.
A trust also protects the tax benefit a gift destroys. Because you keep control of the property until death, the IRS still treats it as yours under IRC § 2038. That means your children receive the full step-up in basis at your death, and the embedded gain from decades of appreciation disappears.
Setting up a trust is a one-time cost, and it is a fraction of what 18 months of probate commissions pull out of a rental estate. See our breakdown of what a revocable living trust costs in Georgia to compare the numbers.
The part parents value most is control over timing. A trust lets you say exactly when and how each child receives their share. You can hold a young child’s portion until age 30, split income between children who manage the property and children who do not, or keep the whole portfolio together so no one can force a sale. The trust follows your instructions, not the court’s default rules.
If a child is still a minor when you die, the trust matters even more. Property left directly to a minor forces a court to appoint a conservator, who manages it until the child turns 18 and then hands it over with no strings attached. A trust instead lets your chosen trustee manage the rental for the child’s benefit and release it on the schedule you set. A minor never receives a rental building unsupervised under a trust.
Method 4 — LLC Plus Revocable Trust: The Full Structure for Active Portfolios
For a landlord with several doors or active tenants, a trust alone is not the whole answer. The trust decides who inherits and avoids probate, but it does not shield your personal assets if a tenant sues. That job belongs to a limited liability company.
The strongest structure uses both. Each rental property sits inside an LLC, and the trust owns the LLC. The LLC builds a liability wall between the rental and your home, your savings, and your other buildings. The trust sits above it and carries the LLC to your children without probate. If you are deciding how to organize several buildings, compare a series LLC against separate LLCs for Georgia rentals.
This is the layer most do-it-yourself plans miss. Investors form an LLC and stop there, assuming it handles their estate plan too. It does not. An LLC with no trust behind it still lands in probate when you die, because your ownership share in the company is a personal asset that has to pass through your estate.
Pairing the two gives you liability protection while you are alive and a clean, private transfer when you are gone. Your children inherit the LLC through the trust, keep the step-up in basis, and take over an organized business instead of a court file. For the full picture of protecting a rental portfolio, start with our Georgia real estate investor estate planning hub.
