The Comparison at a Glance
| Dimension |
Trust Holds Title Directly |
Trust Owns LLC That Holds Title |
| Liability protection from tenant lawsuits |
None — O.C.G.A. § 53-12-82(a)(1) |
Partial — LLC is a separate legal entity |
| Charging order protection |
N/A |
Non-exclusive (O.C.G.A. § 14-11-504(b)) — garnishment also available |
| Probate avoidance |
Complete for funded assets |
Complete — LLC interest passes through trust |
| Incapacity coverage |
Complete — successor trustee steps in |
Complete — successor trustee controls LLC |
| Due-on-sale protection (financed properties) |
Yes — 12 U.S.C. § 1701j-3(d)(8) |
No — Garn-St. Germain does not protect LLC transfers |
| Federal income tax |
Identical — Form 1040 (disregarded entity) |
Identical — Form 1040 (disregarded entity) |
| 1031 exchange eligibility |
Yes — same taxpayer under IRC § 676 |
Yes — same taxpayer under IRC § 676 |
| Setup complexity and cost |
Lower — deed transfer only |
Higher — LLC formation + deed + operating agreement |
Dimension 1 — Liability Protection: What a Trust Does and Does Not Do
Most investors who ask about this comparison are trying to solve a liability problem. The question is usually: “If a tenant sues me, does my trust protect my other properties?”
The answer when title is held in a revocable trust: no. O.C.G.A. § 53-12-82(a)(1) makes this explicit — the property of a revocable trust is subject to claims of the settlor’s creditors during the settlor’s lifetime. A judgment creditor can reach trust assets as if the trust did not exist.
The trust is a succession tool, not a liability tool. It solves probate, incapacity, and distribution control. It does not create a barrier between a creditor and the investor’s assets.
An LLC is a separate legal entity under Georgia law. A tenant who wins a judgment against a landlord can reach the assets inside the LLC that owns the rental property — but not the investor’s personal assets held in a separate LLC or trust. The LLC creates entity-level separation between properties, so a lawsuit over Property A cannot reach Property B if they are in separate entities.
Dimension 2 — What Georgia’s Charging Order Actually Does
When a creditor wins a judgment against an LLC member personally, the creditor cannot simply take the investor’s LLC interest. Under O.C.G.A. § 14-11-504(a), the creditor can obtain a charging order, which limits them to “only the rights of an assignee of the limited liability company interest.” That means they can receive distributions if and when the LLC makes them — but they cannot manage the LLC, vote, or force a distribution.
Georgia’s statute, however, is explicitly non-exclusive. O.C.G.A. § 14-11-504(b) states the charging order remedy “shall not be deemed exclusive of others which may exist, including, without limitation, the right of a judgment creditor to reach the limited liability company interest of the member by process of garnishment served on the limited liability company.” A creditor can serve garnishment on the LLC directly. Georgia courts have applied this statute as written.
Dimension 3 — Single-Member LLC: The Unsettled Question
Most Georgia rental property investors own single-member LLCs. Georgia’s charging order statute applies to all LLCs, but its protections are weaker and legally unsettled for single-member entities.
In 2010, the Florida Supreme Court held in Olmstead v. FTC that a charging order is not the exclusive remedy against a single-member LLC’s sole member — a court could order the member to surrender their entire membership interest. That reasoning could be applied in Georgia.
No Georgia appellate court has issued a definitive ruling on whether Olmstead-type reasoning applies to Georgia single-member LLCs. The 2009 amendment to O.C.G.A. § 14-11-504 added language barring creditors from forcing dissolution or a foreclosure sale of the LLC interest — but it did not explicitly address whether a court could treat a single-member LLC creditor as acquiring all membership rights including management. Georgia investors with significant lawsuit exposure should discuss the specific protection level their structure provides with a Georgia attorney before relying on it.
Dimension 4 — The Mortgage Problem: Garn-St. Germain
This is the dimension that most often determines which structure is right for a specific property.
The Garn-St. Germain Depository Institutions Act of 1982 (12 U.S.C. § 1701j-3(d)(8)) prohibits lenders from enforcing due-on-sale clauses when a borrower transfers mortgaged property into a revocable living trust — provided the borrower remains a beneficiary of the trust. This federal protection is why Georgia investors can transfer a financed property into a revocable trust without triggering the mortgage’s acceleration clause.
The Garn-St. Germain protection does not extend to LLC transfers. Business entities appear nowhere in the statute’s nine exemptions. Transferring a mortgaged property into an LLC is not protected. The lender has the legal right to accelerate the loan and demand full repayment.
The practical workflow for most Georgia investors with financed properties: the revocable trust holds title while the property has a conventional mortgage. When the property is refinanced into a portfolio loan or commercial loan that permits LLC title, the property moves into an LLC owned by the trust. Free-and-clear properties can go into the LLC structure immediately.
Dimension 5 — Tax Treatment: Both Structures Are Identical
A revocable trust is a grantor trust under IRC § 676 — all rental income, depreciation, mortgage interest, and other deductions flow through to the grantor’s Form 1040. No separate trust return is required.
A single-member LLC is a disregarded entity by default under Treas. Reg. § 301.7701-3. When owned by a revocable trust, both are disregarded, and everything flows to the grantor’s Form 1040 with no entity-level return at either layer.
At death, both structures receive a full stepped-up basis under IRC § 1014, because both are included in the grantor’s gross estate under IRC § 2038. IRS Revenue Ruling 2023-2 does not affect either structure — it applies only to irrevocable grantor trust assets excluded from the gross estate. For 1031 exchanges, both structures are treated as the same taxpayer as the individual grantor under IRC § 676.
Which Structure Is Right for Your Rental Portfolio
For most Georgia investors, the answer is both — with the choice of which entity holds title at any given moment driven by the mortgage situation.
Unfinanced properties: Move into an LLC owned by the revocable trust. The LLC provides entity-level liability separation. The trust provides probate avoidance, incapacity coverage, and stepped-up basis at death.
Financed properties with conventional mortgages: The revocable trust holds title directly. This preserves the Garn-St. Germain protection. When the mortgage is paid off or refinanced into a portfolio loan that permits LLC title, transfer the property into an LLC owned by the trust.
For the full overview of how Georgia investors structure their portfolios across these considerations, see Estate Planning for Real Estate Investors. For pricing on the full structure, see How Much Does Estate Planning Cost for a Real Estate Investor in Georgia.
