Ancillary Probate: What it is and How to Avoid It

Gabriel Katzner - March 23, 2020 - Estate Planning
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If you own property in more than one state, for example, a vacation home or a car titled in a state outside the one where you live, you’ll need to factor that property into your estate plan. This kind of ownership may necessitate an additional probate proceeding called ancillary probate. With the right estate planning process, this result can be made less burdensome. You may be able to avoid it altogether. 

 

What Is Ancillary Probate?

 

A probate proceeding is a court process used to transfer your property to family members and loved ones named in your Last Will and Testament when you pass away. Probate is not required for any property that you’ve placed in a Revocable Living Trust or that automatically belongs to a surviving joint owner upon your death, such as a joint bank account or marital home owned by you and your spouse as joint tenants with right of survivorship. In those situations, you no longer own the property when you die, so probate is unnecessary. 

In situations in which probate is required, the property you own in different states may require multiple probate processes. Typically, the law of the state where real estate (and sometimes jewelry or art) is located determines what happens to that property at your death. Intangible personal property (such as a copyright or trademark, and in some states, a retirement or bank account) can be probated in the state where you lived until your death. 

The primary probate proceeding takes place in the state where you were domiciled at the time of your death. An ancillary probate proceeding is typically necessary if you owned real estate or other property in another state.

In the primary probate proceeding, the court reviews the Last Will and Testament and admits it into probate, then appoints the executor named in your Will to manage the estate. The executor locates the property, pays outstanding debts, and then distributes the property according to the instructions left in your Will. 

Although state law varies, once the Will is found valid, probate courts in other states will often allow the appointed executor to file the necessary probate letters, and a court-stamped copy of the Will, in the probate court in the state where the real estate or other property is located. At that point, the executor can exercise control over the property in the other state, and can transfer it to your beneficiaries as specified in your Will, in accordance with state law.  

Note: Ancillary probate will also be necessary if you die without a Will while owning real estate in another state. (You can avoid this by taking the steps below.) If you do not have a Will, state law will determine who will receive the property. Because state law varies, it is possible that the heirs specified in the law of the state in which you are living when you pass away may differ from the heirs named in the law of the state where your property is located.  

Most people try to avoid this situation because it can involve all the costs associated with probating an estate: court fees, accounting fees, and attorney’s fees – times two! It also means a long waiting period before the property is transferred and the lack of privacy arising from public court records.

 

How Can Ancillary Probate Be Avoided?

 

Joint ownership. If you own property jointly with another person (for example, by joint tenancy with right of survivorship, tenancy by the entirety, or community property with a right of survivorship) the property will automatically pass to that person without a probate proceeding. This type of ownership is typically used for real estate, bank accounts, and vehicles. The surviving owner only needs to submit completed forms to the government office that recorded the deed or title, or the bank where a joint account is located, and probate is unnecessary. Although joint ownership of property avoids the probate proceedings and might seem like a quick and easy way to transfer property, the property jointly owned is now subject to the surviving owner’s creditors, divorcing spouse, or bankruptcy.

Transfer-on-death deed. A few states offer a special type of deed that will not become effective until your death (called a transfer-on-death deed or a beneficiary deed) with the local real estate records office. Unlike joint ownership, you retain complete control over the property during your lifetime, and you can even revoke the deed any time. The person(s) named in the deed automatically receives ownership of the real estate only upon your death, which removes the need for probate. Like owning jointly, transferring real estate using a transfer-on-death deed provides no protection for the real estate and could expose it to the new owner’s creditors.

Revocable Living Trust. Transfer the title of the property located in the other state into a revocable living trust during your lifetime and you can avoid ancillary probate. This is because the trust, not you, owns the title to the property. Since a trust continues after your death, probate does not apply. If you want to avoid probate altogether, transfer your accounts and property located in your home state to the trust as well. Name yourself as the trustee and you can retain control over the property and even change or revoke the trust at any time during your lifetime. If you are alive and unable to act as trustee, your successor trustee will continue to manage and distribute funds for your benefit. Upon your death, the successor trustee will transfer the property to your beneficiaries according to your specifications. 

 

Make Things Easier for Your Loved Ones

 

When you pass away, spare your grieving family members from a messy and complicated probate process to handle the transfer of your assets. If you own property located in another state, the hassles they may face could be reduced with a well-thought-out Revocable Living Trust-based estate plan. We can help you create an estate plan that will give you and your family peace of mind when you pass away. Contact us today to set up a meeting. We can discuss an estate plan and make sure your property is transferred to your beneficiaries as you wish, without the need for court involvement, regardless of where it is located.

You can use the link below to schedule a call with Gabriel Katzner, or just call us at 855.528.9637 to learn more about how best to plan today to protect those most important to you




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