Is Estate Planning Affected by Property in Two States?
When you own real estate or tangible property (such as a boat) across multiple states, your estate planning strategy becomes more complex. A single trust can effectively manage all your real estate holdings regardless of their location, eliminating the need for separate trusts for each state.
Tax Implications
Inherited assets often trigger tax obligations for beneficiaries. The state where the asset is physically located determines which tax laws apply, meaning you may face varying tax requirements across different jurisdictions.
Common Planning Mistakes
Avoiding Probate Complications: Many people make critical errors in their multi-state planning. Failing to establish a trust is a frequent mistake – without one, assets enter probate. Additional problems arise from improper property titling within a trust or insufficient funding.
When these mistakes occur, ancillary probate becomes necessary. This means opening separate probate estates in each state where property exists, potentially doubling administrative costs, effort, and emotional stress. Having two simultaneous probate proceedings also extends the timeline for settling the estate.
Alternative Strategies
Several options can help avoid multi-state probate complications:
- Transfer on Death Deeds: Many states allow property to pass directly to beneficiaries through transfer-on-death affidavits or beneficiary deeds, bypassing probate entirely.
- Joint Ownership with Survivorship Rights: Adding a co-owner with survivorship on the deed enables property to transfer automatically upon death.
- Revocable Trusts: After a spouse passes or if no surviving spouse exists, transferring property into a revocable trust provides continued management.
Critical Reminder: Consult with a local estate planning attorney before implementing any multi-state strategy, as requirements vary significantly by jurisdiction. Contact The Stegall Law Firm to discuss how to properly plan for property held in multiple states.
