Owning property in multiple states can present unique legal and estate planning challenges. This comprehensive guide will cover essential information for property owners with assets across state lines, including probate, estate taxes, and strategies to protect your property.
At Heritage Law Office, our experienced estate planning attorneys will thoroughly review your needs and wants when planning your estate and provide an outline of your best options. Contact us either online or at 414-253-8500 to schedule a free consultation today.
The Probate Process for Multistate Property Owners
When a person passes away, their estate usually goes through a legal process known as probate. Probate ensures the deceased's assets are distributed according to their will or state law. Owning property in multiple states can complicate this process, as each state has its own probate laws.
Ancillary Probate
If you own property in multiple states, your estate may need to undergo ancillary probate. This is a separate probate proceeding in the state where the additional property is located. It can be time-consuming, costly, and may delay the distribution of your assets to your beneficiaries.
Simplified Probate Procedures
Some states offer simplified probate procedures for small estates, which can help you avoid ancillary probate. However, eligibility for these procedures varies by state, and the value of your out-of-state property may affect your ability to use them.
Estate Taxes and Multistate Property Ownership
Estate taxes are another concern for individuals who own property in multiple states. The federal government imposes an estate tax on high-value estates, and some states also have their own estate or inheritance taxes.
Federal Estate Tax
The federal estate tax applies to estates exceeding a specific exemption amount, which changes periodically. If your total estate value, including property in multiple states, exceeds this amount, your estate may be subject to federal estate tax.
State Estate and Inheritance Taxes
State estate and inheritance taxes can vary widely, with some states imposing high taxes and others having no estate tax at all. If your property is located in a state with estate or inheritance taxes, your estate may be subject to these taxes even if you don't reside in that state.
Strategies to Protect Multistate Property
There are several estate planning strategies to help protect your property and minimize the complications of owning assets in multiple states:
Trusts
Creating a trust can help you avoid the probate process altogether. By transferring property ownership to a trust, you can ensure that the property is managed and distributed according to your wishes, without going through probate.
Revocable Living Trusts
A revocable living trust allows you to maintain control over your property while you're alive and make changes to the trust as needed. Upon your death, the property is distributed according to the trust's terms, avoiding probate.
Irrevocable Trusts
An irrevocable trust cannot be changed or revoked once it's established. This type of trust can offer greater asset protection, and it may help reduce estate taxes.
LLCs and Corporations
Holding property through a limited liability company (LLC) or a corporation can help streamline the probate process by keeping property ownership under one legal entity. This strategy can also offer liability protection and potential tax benefits.
Working with an Experienced Estate Planning Attorney
Navigating the complexities of owning property in multiple states requires the guidance of an experienced estate planning attorney. They can help you develop a comprehensive plan to protect your assets, minimize taxes, and ensure a smooth transition for your beneficiaries.
For assistance with multistate property ownership and estate planning, contact our experienced attorneys at Heritage Law Office by using the online form or calling us directly at 414-253-8500. Our knowledgeable team will assess your unique situation and provide tailored solutions for your estate planning needs.
Frequently Asked Questions (FAQs)
1. What is probate and why is it important for multistate property owners?
Probate is a legal process that happens after a person's death, wherein their assets and properties are distributed according to their will or state law. It is important for multistate property owners because each state has different probate laws, and owning properties in different states may necessitate multiple probate proceedings (known as ancillary probate), which can be time-consuming and costly.
2. What is ancillary probate and how can it affect my estate planning?
Ancillary probate is a separate probate proceeding that happens in a state where the deceased person owned property, but did not reside. If you own properties in multiple states, your estate may need to undergo ancillary probate for each state. This can delay the distribution of your assets to your beneficiaries and can increase the overall cost of settling your estate.
3. How do state estate and inheritance taxes affect multistate property owners?
State estate and inheritance taxes can vary widely from state to state. If you own property in a state that imposes such taxes, your estate may be subject to these taxes even if you don't reside in that state. It's important to consider these potential tax liabilities when planning your estate and seek professional advice to minimize your overall tax burden.
4. What strategies can be used to protect my properties in different states?
Several strategies can help protect your properties and minimize the complications of multistate property ownership. These include creating trusts, such as revocable living trusts and irrevocable trusts, which can help you avoid probate and may offer tax advantages. Holding property through a limited liability company (LLC) or corporation can also simplify property ownership, provide liability protection, and offer potential tax benefits.
5. Why should I seek the assistance of an estate planning attorney for multistate property ownership?
Owning properties in multiple states can create a complex legal situation that can be challenging to navigate on your own. An experienced estate planning attorney can help you understand the laws in each state where you own property, develop strategies to protect your assets, minimize taxes, and ensure a smooth transition for your beneficiaries. A professional can help tailor a plan to your unique situation and provide peace of mind that your estate will be handled according to your wishes.
