Out-of-State Properties Can Be a Probate Headache

Probating a will can turn into a drawn-out process, and unfortunately, you can’t always avoid multiple probate processes. When a person dies and leaves property in one state to someone in a different state, it is typically necessary to obtain probate for each jurisdiction.

On the other hand, if you plan ahead and take care to organize your properties with your estate in mind, you may be able to sidestep some of these nuisances. But why is there an added layer of complication? Ultimately, this comes down to the fact that the rules may differ from one state to another. The probate court in the state where the person lived is known as the domiciliary probate, and this is the state that has jurisdiction over the majority of the assets.

On the other hand, certain property — namely homes, land, tangible property, cars and boats as well as livestock, oil, gas or mineral rights — is governed by the laws of the state in which the property is located. Suppose, for example, that Sally lives and works in New York state for most of the year. At the same time, she maintains a small house in northern New Hampshire, which she utilizes as a retreat from the heat during the hot summer months.

On this same property, she also keeps a boat that is registered in New Hampshire, which she uses on a nearby lake. When Sally dies in New York, her domiciliary probate will be New York, while the summer house and the boat will come under New Hampshire jurisdiction as part of the ancillary probate.

Time and money

Certain shortcuts can make matters easier. In some places, out-of-state executors may be excused from obtaining letters testamentary from a court in the secondary state. In other words, the secondary court may recognize the letters, which are the official documents that confirm executorship. If the executors have already been authorized in the domiciliary state, they can proceed directly to filing both the letters and a copy of the will.

From here, the ancillary probate will start to cost a significant amount of money. The probate will require outlays for court fees, accountants and local attorneys. Even with the benefit of an abbreviated proceeding, the legal fees can reach upwards of several thousand dollars, all of which will whittle down the estate.

More months will go by as the process continues to drag on, and the estate cannot be settled until all the ancillary proceedings are put to rest. Paperwork will also pile up in most cases, particularly if more creditors need to be addressed. Estate taxes may be payable in each of the states, which will likely necessitate professional accounting.

In the event of intestacy, a situation in which a valid will does not exist, another host of problems will likely arise. Typically speaking, a surviving spouse will inherit half of an intestate estate, with the remainder being split among the closest living relatives. Even so, intestacy rules may vary from one state to the next, meaning that out-of-state real estate might end up being passed along to unintended family members.

Caveat executor! If you are asked to serve as an executor, be sure to ask about assets in other locations before you bite off more than you expected to chew.

Are there workarounds?

Three standard solutions can help you avoid ancillaries or any other probates.

  • Joint tenancy with right of survivorship: You can retitle property with joint ownership. However, if you later change your mind and you ultimately decide to revoke the joint tenancy, all other owners must be in agreement with your decision.
  • Revocable living trust: The deed that designates the trust as legal owner of the property is recorded in the county where the property is located.
  • Transfer on death or other beneficiary deeds: In about 28 states, named beneficiaries only need to record an affidavit with the county clerk after your death.

Different distinctions and formalities will apply in each state, as every state has its own set of requirements. Make sure you take the time to discuss your options with an estate attorney to better understand how these details will affect you and your property, no matter where you are situated.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.