Starting a business, managing rentals, or just trying to get your financial house in order? You’re not alone—and if you’ve been Googling questions like “LLC vs. S Corp” or “Should I put my car in a trust?”—this guide is for you.
Tax law and legal planning don’t have to be overwhelming. In fact, when you break it down, most smart strategies start with asking the right question.
Below are 10 of the most common tax and legal questions people ask—along with clear, actionable answers that can help you protect your assets, lower your taxes, and plan for the long run.
1. Should I start with an LLC or jump straight to an S Corporation?
Start with an LLC. It’s simple, flexible, and gives you liability protection. There are also six types of LLCs for you to choose from. You can start writing off expenses right away, even if you’re just getting off the ground.
Once your business nets over $50,000 in profit, you can elect to be taxed as an S Corporation. This shift can save you thousands annually in self-employment taxes, as part of your income will come to you as dividends instead of salary.
Keep it simple to start. Optimization comes with progress.
Check out our blog, “When to use an S Corporation”, to learn more.
2. Can I rent property to my mom at a discount and still deduct expenses?
A revocable living trust picks up where the will leaves off.
If you rent to a family member for less than fair market value, the IRS likely won’t treat it as a legitimate rental—meaning you may lose deductions for depreciation, repairs, and utilities.
Here are your options:
- ✔️Rent at full value and gift some back to your family member (up to $17,000/year without gift tax).
- ✔️Treat the home as personal use and forget the write-offs.
- ✔️Or fully report it as rental income and claim all eligible expenses.
Consistency and documentation matter here. You can’t do both.
3. Should I put my car into a revocable living trust?
For most people, no. A personal vehicle doesn’t typically need to be in a living trust. In many states, your heirs can transfer the vehicle with a simple form and a death certificate—no probate required.
Unless you own collectible or high-value vehicles and want them to pass with other major assets, keep it simple and leave the car out.
4. Is an umbrella insurance policy actually worth it?
Maybe—but don’t overestimate what it does.
An umbrella policy only kicks in after your main insurance (home, auto, etc.) has maxed out—and only for covered incidents. It doesn’t replace a comprehensive plan. Think of it as a safety net on top of what you already have.
If you’ve got teen drivers, multiple properties, or visible assets, it can be a smart layer of protection. Just make sure you’re not buying it to avoid using LLCs or real estate planning. It’s not a silver bullet.
5. Does the home office deduction really save me money?
Yes—just not as much as most people think.
The simplified method offers $5 per square foot (up to 300 sq. ft.), capping at $1,500/year. It may not be huge, but here’s the real benefit: It unlocks your vehicle and mileage deductions by making your home your primary place of business.
Even small deductions add up—and this one has ripple effects.
Read, “Maximizing Your S-Corp Home Office Tax Deduction: Tips and Tricks” for more information.
6. I’m investing with someone I’m not married to. What documents do we need?
If you’re in a business or real estate venture with a romantic partner or friend, take this seriously. You need:
- ✔️Two separate living trusts for estate planning
- ✔️A Buy-Sell Agreement to spell out what happens if one partner dies or exits
- ✔️A formal LLC that outlines ownership percentages and roles
Even the best relationships can run into legal complications. Planning ahead means less risk, more clarity, and no surprises.
7. After someone dies, should you keep rental properties in the trust or distribute them?
If the heirs are adults, financially stable, and not at risk of creditors or lawsuits, it’s often best to distribute the properties out of the trust. That avoids high trust tax rates and gives beneficiaries more flexibility.
If minors or at-risk adults are involved, keeping the properties in trust may be wise—just make sure the trustee is equipped to manage assets properly.
8. How do I legally change my state of residence to save on income tax?
You have to do more than say, “I moved.” States want proof.
To establish a new domicile, you’ll need to:
- ✔️Get a driver’s license and voter registration in the new state
- ✔️Spend at least 183 days per year there
- ✔️Close ties to your previous state (home sale, change banks, update addresses)
Fail to do this, and your old state may still consider you a resident—and tax you accordingly. It’s not just about location; it’s about documentation.
9. If I get divorced, can my spouse claim part of my business?
If you’re married and don’t have a prenup or postnup, your spouse likely has a claim to half the business value, regardless of whether you run it solo.
You’ll probably get to keep the business—but may need to buy them out or offset their share with other assets.
Want to keep control? Create a postnuptial agreement while things are stable. And if you’re heading into a divorce, consult a specialist early so you can plan strategically.
10. I’m mining crypto—should I run this through an S Corp?
Yes, if you’re earning real income.
Crypto mining generates ordinary active income, not passive income. That means it’s subject to self-employment tax. Running this through an S Corporation allows you to:
- ✔️Pay yourself a reasonable salary
- ✔️Avoid excess self-employment tax through dividend distributions
- ✔️Deduct business expenses like hardware, electricity, and management costs
Don’t treat crypto mining like casual investing. It’s a business—and should be structured like one.
Final Thoughts
Smart planning isn’t about being perfect—it’s about being intentional.
Ask the right questions. Structure your business. Protect your assets. And don’t wait until you’re in the middle of a lawsuit, tax audit, or family dispute to figure things out.
Most importantly, keep things simple, but never sloppy. A little planning today can prevent a financial disaster tomorrow.
Ready to put these principles to work? Speak to a qualified professional, get your structures in place, and move forward with confidence.
