Few things are as dreaded as probate. This is especially true for wealthier families who have large estates spread across multiple states and jurisdictions. For instance, there are quite a few people living in New York who invest in Florida retirement properties. Perhaps they rent these properties during the off-season or during the winter, just using them for small vacations. The plan is to have them paid off by retirement, sell the New York house, and retire mortgage free. But what happens when they die before retirement? Now there are homes in two states to deal with. Here are just a few considerations for those holding assets in more than one state.
Real Property in Other States
Probate laws vary from state to state. Most states share similar rules, but some are quite unique. One common rule is that probate is only required if the decedent has over a set threshold of assets. In Illinois, for instance, you do not need probate at all if the estate is worth less than $100,000. In that case, you can simply use a small estate affidavit. In New York, there is a shortcut available for those with less than $30,000. However, most jurisdictions require probate when real property – real estate – is concerned. For this reason, many people prefer to hold real estate in joint tenancy so that the property passes outside of probate directly to the co-owner. This may also be a wise idea for anyone whose only holding in another state is a home. Making a trusted adult child or a spouse a joint tenant will avoid probate.
Bank Accounts and Deposit Boxes in Other States
This should be avoided unless necessary. For one, no one needs the complication of having bank accounts scattered around the country. Gone are the days of needing “local” banks. Unless there is some overwhelming need to have a bank account where you vacation, you should consider keeping funds in your home state for simplicity. If, however, this is not an option, you can always make these out of state funds payable on death, so as to avoid having to open a probate matter in that jurisdiction. Likewise, consider putting valuables in a local safe deposit box.
Business Interests and Investments in Other States
Finally, some wealthier individuals may hold investments or business interests in other states. To the extent possible, such interests may be eligible for transfer into a trust. Those that are not might be made subsidiaries of a business located in your home state. Naturally, these questions should be directed to a local New York attorney and your accountant, if applicable.
What to do if Multi-state Probate is Unavoidable
If all else fails, a competent elder law attorney can enlist the assistance of an attorney in the other jurisdiction to open what is known as an “ancillary probate proceeding.” This allows the representative to handle affairs in the other state while probating the original matter at home. While often more costly, one should not attempt a shortcut in this area of law, because many people have found themselves in big trouble for making even the most innocent errors.