Owning a vacation home can be very beneficial. Not only can it help you save money in travel expenses, but you can also make money by renting it out during the rest of the year when you're not using it. However, owning property in a different state than your primary residence can cause minor complications with your estate planning. Here's what you need to know so you can make the necessary adjustments now to avoid problems later.
Must Follow Probate Laws in All Applicable States
The first issue will be the fact that your estate plan will have to account for probate laws in all states where you hold property. While this may be easy if the laws are the same, it can present a serious challenge if the probate laws and processes in each state are incompatible with each other.
For instance, Nevada is a community property state, where any assets acquired during the marriage is automatically shared by the both parties in the relationship regardless of whose name may be on the ownership documents. In this state, you don't necessarily have to write in your will that you want all your marital assets to go to your spouse because that will automatically happen.
However, Michigan is a common law state, where the only recognized owner of an asset is the person(s) who name is on the ownership documents. If you owned a home in that state and the deed was only in your name, you would have to specifically leave that home to your spouse in your will because it may not be automatically be given to your wife or husband upon your death.
Therefore, it's critical you research the estate laws in each state where you own assets and craft your estate plan to account for any differences. A good rule of thumb is to follow the stricter of two similar laws, which should reduce the risk of making an error.
You May Need Multiple Executors
Another issue that is likely to come up is that you may need to assign multiple executors to handle assets in every state you own property in. For instance, you would need to have someone in your home state handling your assets there and another person in the state where you have your vacation home handling legal issues that may arise there.
Some states do allow out-of-state executors to perform their duties in the state as long as they follow the applicable laws. The only issue here is that probate in the second state is typically done either at the same time as or after probate in the deceased persons' primary state of residence. In either event, this means the executor will need to travel, so it's important to choose someone who is free to do so.
Other states put restrictions on who can be an estate administrator, however. In some states, only people who are related to the deceased and a resident of the state can perform as executor of the state. That means you'll have to appoint another person to handle your estate issues in that state. You may be able to substitute a personal representative (e.g., attorney), so it's best to consult the laws in the states where you own assets.
There are many things you can do to avoid these issues or, at least, make the process simpler for the executor of your estate. For instance, putting assets owned in another state into a revocable trust can help you bypass the probate process altogether. For advice on the best way to include out-of-state assets in your estate plan or help getting through the probate process, contact a probate attorney.Share
25 September 2017
If you are like most people, you might wonder how iron clad that real estate contract is, especially when it involves strange additions or stipulations you have never heard of before. Fortunately, I have always worked with a real estate attorney who understands how to ward off problems, and it has really improved my ability to buy and sell real estate. After I find a great house, he helps to draft the contract so that it helps my case, and it has really made a big difference for me. Check out this blog to learn how a real estate attorney could help you.