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02.06.20

What happens to out-of-state property when you die?

BY Kerri L. Painting

If a decedent dies leaving real estate or tangible personal property in his/her individual name in two states, two estate proceedings may be necessary. The decedent's property in the domiciliary state will fall under the primary estate proceeding and court rules of that state. However, the decedent's property in the non-domiciliary state may require an ancillary estate proceeding, which will follow the court rules of the non-domiciliary state.

An ancillary proceeding to transfer a decedent's property will likely incur additional court paperwork and filing fees. In addition, an ancillary estate proceeding will be supervised under an attorney licensed to practice in that state.

If the decedent owns property outside of the domiciliary state at the time of death, the estate fiduciary who was appointed in the domiciliary state will need to initiate a separate, additional, proceeding in the non-domiciliary state. This process has the potential to become especially complicated if the decedent did not own property requiring an estate proceeding in the domiciliary state, but owned property requiring an estate proceeding in the non-domiciliary state. In this case, a primary estate proceeding must be brought in the domiciliary state prior to the ancillary proceeding in the non-domiciliary state.

For example, the decedent dies a resident of New York, but has a vacation home in Florida. If the decedent has no assets in their individual name in New York, but owns the real estate in Florida in his/her name alone, an estate proceeding will be necessary in both New York and Florida in order to transfer the Florida property.

There are steps you can take during your lifetime to avoid the time and expense of an ancillary proceeding on your death:

  1. Place the out-of-state property into a trust, LLC or family partnership
  2. Add a co-owner to the out-of-state property
  3. Place a beneficiary designation on the out-of-state property, if available (note that this may have undesirable estate tax consequences which must be considered)
  4. Sell or gift the property

If you have real or tangible personal property outside of your domiciliary state, be sure to include that in your estate planning discussions with your attorney so you are aware of the disposition requirements on your death.

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Kerri L. Painting

Paralegal

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