Definition and Explanation of Ancillary Probate
Ancillary probate is what happens when a decedent owns real estate or tangible personal property in different states at the time of his death. This type of situation poses a unique challenge when you're planning your estate, not to mention for the person who will eventually serve as your personal representative.
The laws of a state where the property is physically located will typically govern what happens if when the owner dies—not the laws of the state where the decedent lived at the time of death. An entire additional probate process becomes necessary, thus the term "ancillary" probate.
What Is Ancillary Probate?
Ancillary probate refers to a probate proceeding that is required in addition to the primary probate proceeding that takes place in your home state. This secondary probate is typically necessary because you own a piece of real estate, such as a vacation home that is located elsewhere, but it can also apply to tangible personal property such as cars, boats, or airplanes that are registered and titled out of state. Ancillary probate can become necessary if you own livestock or oil, gas, or mineral rights that are attached to real estate located in another state.
One of the biggest drawbacks of ancillary probate is the added cost of having to administer more than one probate estate, including multiple court fees, accounting fees, and attorneys' fees.
Another drawback can occur when an estate is intestate—the deceased died without a valid last will and testament. Intestacy laws determine who receives the decedent's property when there is no will, and the laws of all 50 states and the District of Columbia are somewhat different. It's possible that the rightful heirs of an intestate estate could be different in the state of the primary probate proceeding than they are in the state of the ancillary probate proceeding.
How You Avoid It
Probate isn't necessary for any property placed in a living trust, regardless of where that property is located. If you're not comfortable placing all your assets into a living trust for some reason, you don't have to. You can allow property located in your state to pass to your beneficiaries through the probate of your will and simply title your out-of-state proceeds in the name of your trust.
You might also consider retitling your property in other states, so you and your desired beneficiary jointly hold ownership with rights of survivorship. For example, if you own a vacation home in Florida that you'd like to leave to your son, you can have a new deed created in which you hold the title as joint tenants with rights of survivorship. He would then automatically inherit the entire property at your death without the necessity of probate.
Additionally, 23 states recognize special beneficiary deeds that allow the property to be transferred at your death without a probate proceeding.
Ask your estate planning attorney if the state where you own property is one of them.
Probate costs your estate money, and two or more probates in various states can double or triple the expense. Your beneficiaries will receive more if you can figure out a way to avoid ancillary probate of your out-of-state property.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.