Planning Your Estate When You Own Property In Multiple States

Do you own a vacation home in another state, or maybe an investment property you picked up years ago? If so, you are not alone. Many Floridians hold real estate in more than one state, and it is more common than ever for retirees to split their time between homes in different parts of the country. But here is the important question: have you thought about what happens to all of that property when you pass away?

Owning property in multiple states adds a layer of complexity to estate planning that many people do not anticipate. Without proper planning, your loved ones could face a drawn-out, expensive legal process that ties up your assets for months or even years. Understanding the issues ahead of time can make a significant difference for the people you care about most.

What Happens to Out-of-State Property After Death

When someone passes away owning real estate in a state where they did not live, a separate court proceeding is typically required in that state before the property can be transferred. This is known as ancillary probate. Under Florida Statute § 734.102, if a person who resided in another state dies owning real property in Florida, a separate ancillary probate proceeding must be filed in the Florida county where that property is located. The reverse is also true: if you are a Florida resident who owns a cabin in North Carolina or a condo in Tennessee, those states have their own rules requiring their own proceedings.

This means your estate could potentially go through multiple probate processes at the same time in different states, each with its own costs, timelines, and legal requirements. That is a burden that falls on your family at an already difficult time.

Strategies That Can Help You Avoid the Multi-State Probate Problem

The good news is that with thoughtful planning, you can often sidestep ancillary probate entirely. Here are some of the most commonly used strategies:

• Revocable living trust: Placing your out-of-state property into a revocable living trust is one of the most effective ways to avoid ancillary probate. Because the trust, not you as an individual, owns the property, it passes to your beneficiaries according to the trust terms without any court involvement in any state.
• Joint ownership with right of survivorship: Property held this way passes automatically to the surviving co-owner upon death, bypassing probate altogether.
• Transfer-on-death deeds: Some states allow you to record a deed that transfers real estate directly to a named beneficiary when you die. Florida does not currently have this option for real property, but other states where you may own property might.
• LLC or other entity ownership: Holding investment property through a limited liability company or similar entity can simplify the transfer process, though this approach has its own legal and tax considerations worth exploring carefully.

How State Laws Differ and Why That Matters

One of the trickiest aspects of owning property in multiple states is that each state has its own laws governing property ownership, estate administration, and even what documents are required for a valid estate plan. For example, a will that is valid in Florida may need to meet additional requirements to be recognized in another state. Some states have estate or inheritance taxes that Florida does not. If your estate plan was designed only with Florida law in mind, it may not work as intended for property you own elsewhere.

This is why it is so important to review your estate plan with someone who understands how multi-state ownership affects your overall picture. Changes in where you own property, how it is titled, and which state you call home can all have meaningful consequences for your family.

Ready to Get Your Multi-State Estate Plan in Order?

If you own real estate in more than one state, now is the time to take a closer look at how your estate plan addresses that property. Waiting until later can leave your family with a complicated and costly mess to sort out. We at Millhorn Elder Law Planning Group encourage you to reach out to our team for guidance. Our estate planning attorneys in the Villages understand the unique challenges that come with owning property across state lines and can help you put a plan in place that protects your assets and your loved ones. Our team at Millhorn Elder Law Planning Group is here to help you plan with confidence. Contact us today to schedule a consultation.

Source:

flsenate.gov/Laws/Statutes/2024/734.102