What is Ancillary Probate?

If at the time of your death, you owned real property solely in your name and in more than one state, your Executor may be required to commence more than one probate proceeding. Ancillary probate may be required in order to transfer your out of state real property to your beneficiaries in accordance with the provisions of your Last Will and Testament.

New Yorkers are the perfect example! Many New Yorkers are snowbirds. It is quite common for New York residents to own real property, such as a vacation home, in a warmer state. While the original probate proceeding would be commenced in New York (the state where you were domiciled), an ancillary probate proceeding would be commenced for the real property located in the state where you did not reside (the state where your vacation home is situated).

Estate Planning Techniques to Help You Avoid Ancillary Probate

An ancillary probate proceeding will delay the process of the administration of the estate. This can cause additional estate administration expenses. You can avoid this by planning in advance. The following are a few of the estate planning techniques that you may implement during your lifetime. These will allow your out-of-state real property to pass by operation of the governing law, upon your death, to the intended beneficiary, avoiding an ancillary probate proceeding:

Revocable Living Trust

Establish a Revocable Living Trust. Fund it with a deed transferring the out-of-state real property to the Trustee of the Revocable Living Trust.

Transfer Property

Transfer the out of state real property so that the deed is in your name, as Joint Tenants with Rights of Survivorship with another person (JTWROS), or as Tenants by the Entirety (TBTE) with your spouse. These forms of ownership should not be confused with a deed in your name with another person, as Tenants in Common (TIC), which does not pass by operation of law, and will require an ancillary probate proceeding.

Transfer on Death Deed

Transfer the out-of-state real property with a revocable Transfer on Death Deed (TOD) to a designated beneficiary pursuant to the Uniform Real Property Transfer On Death Act (URPTODA). Unlike the JTWROS and TBTE deeds, the designated beneficiary of a TOD Deed, will have no interest in the real property during your lifetime. About one-half of the states and the District of Columbia have adopted URPTODA and allow Transfer on Death Deeds. These states include Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Notably, New York and Florida do not allow TOD Deeds. You only need to own real property in these states or the District of Columbia in order to use a TOD Deed, you are not required to reside in the state.

Important to Note

Ownership of your out-of-state real property via a Deed to the Trustee of your Revocable Living Trust, as JTWROS, as TBTE, or as TOD, will allow the out of state real property to pass by operation of law ensuring the avoidance of an ancillary probate proceeding. However, owning out of state real property via a TIC deed will not pass by operation of law avoiding an ancillary probate proceeding.

These estate planning techniques must be implemented during your lifetime in order to provide for the by operation of law transfer to your beneficiary. After your death, your Executor will not be able to employ these methods to avoid ancillary probate for your out of state real property.

It is important when implementing estate planning to consult with and retain experienced attorneys. Russo Law Group, P.C., has knowledgeable attorneys who can provide professional services and advise you. We invite you to take advantage of our comprehensive website as well as our free seminars and webinars to learn more about how Russo Law Group, P.C., may assist you.