I was confused by the assertion that this is not a domestic partnership, because last I heard New Jersey is still part of the US, even though its inhabitants are not allowed to pump their own gas.  But I think the helpful IRS taxpayer service representative (who would call them to ask, anyway?) was thinking of two people who are not married but living together in an arrangement close to it.  Not, a domestic partnership as distinguished from a foreign partnership.

You seem certain that this property will never be sold, but families have a way of going in different directions when the first (or in this case, second) generation dies.  And how does placing it in an LLC affect stepped-up basis?  Also, is the insurance policy issued to the LLC, and so it doesn't cover the individual owners who would certainly also be sued?  Does your umbrella policy cover that situation?  

Apparently NJ requires you to get an EIN before filing for an LLC.  I'm sure IRS appreciates that extra work.  Maybe it would be required anyway.  Speaking of extra work, have you filed the BOI report yet? And NJ has a $75 annual fee for an LLC?  That's not as bad as California, where this would not be the solution to estate planning for co-owned property.