When a person dies leaving assets owned individually in the decedent\u2019s name only, those assets will need to pass through a court-supervised process known as \u201cprobate.\u201d\u00a0 The primary probate for a decedent is conducted under the jurisdiction of the appropriate probate court in the state where the decedent lived.\u00a0 An \u201cancillary probate\u201d is an additional probate process that is necessary if the decedent owned any real estate outside of the state where the primary probate process is being conducted.<\/p>\n
It can be a little tricky to understand the concept but in law, all assets \u201clive\u201d somewhere.\u00a0 Most types of non-physical assets are considered \u201cintangible\u201d property.\u00a0 Bank accounts and brokerage accounts, for example, are intangible assets.\u00a0 The law considers that intangible property \u201clives\u201d where the account holder lived.\u00a0 So no matter where in the world the decedent owned a bank account, that account will be within the scope of assets passing through the primary probate process.\u00a0 Similarly, the law considers tangible \u201cpersonal\u201d property as being attached to the residency of the owner.\u00a0 So if the decedent dies owning a motor vehicle that happens to be parked out of state, that motor vehicle is still part of the primary probate.<\/p>\n
In contrast, the law considers real estate to \u201clive\u201d where the real estate is located.\u00a0 Real estate that is located outside the jurisdiction of the probate court where a decedent lived cannot be handled as part of the primary probate.\u00a0 Rather, a separate process will need to be conducted in that other state.\u00a0 Even if there is only one parcel located out of state, the need for that second process can drive up costs precipitously, and inevitably there will be added delays and complications for the fiduciary.<\/p>\n
Assume a Connecticut resident dies with owning real estate in Florida and Massachusetts.\u00a0 Let\u2019s also assume that the decedent owns Connecticut assets totaling $600,000, and that the real estate in Massachusetts is worth $500,000.\u00a0 The primary probate process will occur in Connecticut, at an average cost (for executor fees, attorneys\u2019 fees, required accountants and tax filings, probate court fees and the like) of 3-5% of the value of the decedent\u2019s gross estate.\u00a0 An ancillary probate proceeding will also have to be brought in Florida, which has set by statute the fees for attorneys and executors. \u00a0\u00a0In fact, attorney\u2019s fees alone may be as high as 3.75% of the gross estate.\u00a0 Further, the decedent is now required not only to file an ancillary proceeding in Massachusetts (and thus to hire a Massachusetts attorney), but has triggered the Massachusetts estate tax, requiring the filing of an additional estate tax return and the expense that that entails, on top of the estate tax due!\u00a0 So in this example, there would be 3 probates and estate taxes paid that could have been avoided.<\/p>\n
Is there a way to avoid the need for an ancillary probate if you own assets located out of state?\u00a0 Yes!\u00a0 While real estate is a type of asset that continues to \u201clive\u201d in the state where the real estate is located,\u00a0 recall that a decedent\u2019s probate estate is comprised only of individually owned assets.\u00a0 If a person were to formally convey the property to a properly designed trust, or a business entity such as a limited liability company, then it may be possible to avoid probate in the nonresident states.<\/p>\n
It is true that there are costs involved with setting up and properly maintaining a revocable trust, an irrevocable trust or a business entity.\u00a0 However, we find that for many clients, the benefits outweigh the costs. For anyone who owns real estate located out of state we highly recommend you come and talk to us about planning so that the estate and\/or trust settlement process goes as smoothly as possible with the minimum involvement with the probate system.<\/p>\n
https:\/\/weatherby-associates.com\/ancillary-probate<\/p>\n","protected":false},"excerpt":{"rendered":"
When a person dies leaving assets owned individually in the decedent\u2019s name only, those assets will need to pass through a court-supervised process known as \u201cprobate.\u201d\u00a0 The primary probate for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2718","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n