Ask an estate planning attorney what investors get wrong and you expect a technical answer about the wrong kind of trust or a bad beneficiary designation. Jason Gaudy, who has practiced at Gaudy Law in Upland, California for 23 years, gives a plainer one. The biggest mistake is that the properties are in nothing at all. No LLC. No trust. Nothing.
The client with 50 to 60 properties and no plan
Gaudy’s example is not a small landlord who got busy. It is a client with 50 to 60 properties who comes in roughly every two years and asks what he should do.
The answer has not changed. Put them in the LLC. Gaudy says he gave the man specific instructions, and describes the reason it never happens with something close to affection: the guy is out there killing it. Buying, selling, moving, shaking. The paperwork never makes it to the top of the list.
He is careful not to make it a character flaw. No shame to them, he says. Most have done nothing because they are busy running the business, not because they do not care.
Why do people stall on this?
Gaudy names the real reason without dressing it up: we do not like to think about dying or talking about it. He includes himself, and he does this for a living.
He also notices a pattern that runs against intuition. The more wealth someone has, the less inclined they seem to sit down and talk about how to protect it.
The stall has a cost, and he states it as a rule of thumb: the less planning, the more likely the family spends a lot of money and a lot of time inside a courtroom. He has watched it happen to people who should have known better, including families of attorneys who practiced in other areas of law and never got their own plan done.
What the delay actually costs
Two numbers from his practice frame it.
First, probate. Gaudy puts average probate fees at $15,000 to $20,000, before the administrator’s compensation and court costs. But he insists the money is not the real cost; the time is. Probate typically holds the estate open about a year, and he has seen probates run two. See probate vs. trust and what it really costs.
Second, the courts are getting slower. Gaudy practices across Los Angeles, San Bernardino, Riverside, Orange, and San Diego counties, and says those courts are roughly 30% busier than they were, because the baby boomer generation is aging and passing. He calls it the greatest transfer of wealth in the history of the world, landing in a court system that was not built for the volume. Probate procedure, fees, and backlogs are state-specific; California is not a proxy for everywhere.
Half-finished counts as nothing
Doing something is not the same as finishing it, and Gaudy sees two versions of the half-finished plan constantly.
The trust that was never funded. The document is signed and sitting in a binder on a shelf, but the deed was never moved into it, or it was moved and then pulled back out during a refinance and never returned. He says property routinely gets transferred out of the trust during a refi, something he finds hard to justify since most trusts would permit the loan with the property still inside. Fixing it after a death means a court filing California calls a Heggstad petition: roughly $5,000 to $7,000 and three to four months. Why DIY online trusts often backfire covers this failure mode in detail.
The LLC that holds nothing. Gaudy describes people forming an entity online and then stopping. Nothing was ever transferred into it. No contracts are in the LLC’s name. His verdict: “It’s useless. It’s just sitting there and making them feel good.”
What he’d have an investor do this quarter
Asked what one thing an investor in their sixties or seventies should do if they have not planned yet, Gaudy does not hedge. Create the living trust, with the powers of attorney and advance directives that go with it. Without those, incapacity means a conservatorship.
Then a second item that sounds trivial and is not: an actual written list of everything you own. He is working with a client right now where assembling that list has taken four months, because the man had bought and sold so much property that he no longer knew what he owned. Gaudy’s office had to put an investigator on a property search to find out.
And if your lawyer or CPA has told you to form LLCs to protect the properties, his advice is to actually do it. The structure that pairs with this, trust over LLC, without giving up control, is the constructive version of the same conversation.
What this means if you’re planning a 1031 exchange
A 1031 exchange is deadline-driven, and the ownership question tends to surface at the worst moment: mid-escrow, when the title company asks how the replacement property should be vested. Investors who already hold property through a trust or LLC handle that in a phone call. Investors who do not are making a permanent titling decision under a 45-day clock. If a sale is anywhere on your horizon, running the numbers first with our exchange calculators and settling the entity question early costs far less than fixing either later.
Watch: The #1 Estate Planning Mistake Real Estate Investors Make with Jason Gaudy, Gaudy Law
Educational only. Not legal, tax, or investment advice. Jason Gaudy is licensed in California; rules vary by state. Consult your own advisors.