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.
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:
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.
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.