Have you been thinking about purchasing that tropical paradise vacation home you’ve been dreaming of in Florida? Or the charming countryside farmhouse with a picturesque landscape in Pennsylvania? Or how about a rustic ski cabin with a crackling fireplace in the mountains of Colorado? Over the years, investing in multiple properties has become an increasing trend. Many of these properties may be either vacation homes or real estate investments across multiple states. Whichever they may be, it is crucial to consider the complications of addressing these multi-state properties in your estate plan. The question is this; how can you ensure that your assets are protected if they exist in different states? Below, we will explore various ways the Law Office of Inna Fershteyn can help you plan your estate with assets across state lines.
What is an Estate Plan?
An estate plan, although varies by case, typically consists of a variety of documents which help you manage your assets both during your lifetime as well as after your death. Primarily, a last will and testament is the main component of your estate plan. It outlines the instructions to handle assets after your death. In addition to a last will and testament, your estate plan can also include other elements such as any trusts, a living will or a power of attorney. A living will serves as your healthcare directive, and includes any treatment preferences in the event that you become incapacitated. Similarly, a power of attorney is an individual of your choosing who will manage your assets during your lifetime if you become incapable of doing so.
Complications of Multi-State Home Ownership
Although owning numerous homes can offer benefits during your lifetime, it can also pose complications during the estate planning process. Since each state only has jurisdiction over property located in that particular state, it will require your additional properties to go through an ancillary probate process in their respective states. For example, your home in New York is able to go through New York Probate Court, however, New York Probate Court has no authority over your vacation home in Florida. Ancillary probate refers to the additional probate processes that must be executed in each respective state. Since each state has its own probate process and tax laws, in the event of your passing, it is likely that the executor of your will must travel to each state and hire an attorney for each individual property. This process can be long, complicated and incredibly expensive, therefore, it is highly recommended to hire an experienced estate planning attorney to help you evaluate your options and choose the most effective way to proceed.
Strategies For Avoiding Complicated and Expensive Probates When You Have Multiple Properties
In this situation, there are various steps to take to avoid lengthy probates that can be costly for your family. It is possible to create a will for each property, tailored to the legalities of each state. Unfortunately, wills are still required to go through probate. If you have individual wills for each property, it will still require a lawyer for each property and it can also cause confusion and conflict for your executor.
The most efficient and least costly approach to plan your estate with properties in various states would be to create a living trust. A revocable trust is a separate legal entity that can be set up during your lifetime to manage your assets. Unlike an irrevocable trust, a revocable trust is a flexible option and is subject to change based on circumstance. This way, you are able to add or remove assets or beneficiaries as long as you are competent. Using this method, you are able to put all real estate into the trust, ensuring that it will be transferred to your beneficiaries based on your instruction. Trusts are the most efficient way to avoid the probate process as well as minimize taxes, therefore, saving money and time.
Co-Ownership with Right of Survivorship for Spouses
Another strategy to avoid extensive probates is to ensure your spouse co-owns your real estate with a right of survivorship. Doing so will ensure that in the event of your sudden death, your property will directly be transferred to your surviving spouse and avoids probate. In addition to the transfer of property to one’s spouse, joint tenancy allows property to be passed down, regardless of relationship. In the event of one’s sudden death, joint tenancy creates a right of survivorship allowing the remaining share of property to be passed to its co-owner.
Formalizing Joint Tenancy
Similar to co-ownership, joint tenancy with rights to survivorship allows property ownership to pass directly to the surviving co-owner(s). The advantage of formalizing a joint tenancy is that it will avoid probate and any co-owner(s) will automatically inherit the property if any of the owners were to pass away.
Naming a beneficiary designation is another strategy that could be utilized when transferring property to avoid costly probates. Appointing a beneficiary designation ensures property is transferred probate free after the owner’s death. Beneficiary designation allows owners to easily appoint trusted individuals and simplifies complicated and expensive probates when you have multiple properties.
Transfer on Death (TOD) Deeds
Some states allow for Transfer on Death deeds, which designate beneficiaries for your real estate. When you pass away, ownership transfers directly to the beneficiaries without the need for probate.
Regularly Review and Update
Laws can change, as can your personal circumstances. Regularly reviewing and updating your estate plan ensures it remains aligned with your wishes and current legal requirements.
How Can an Attorney Help You?
If you find yourself in the complex situation of estate planning, specifically if you own properties in multiple states, Attorney Inna Fershteyn is a professional who can guide you through the intricate process of estate planning with expertise and efficiency. With her deep understanding of state laws, extensive experience in estate planning and commitment to personalized care, Inna Fershteyn Esq. is equipped to assist you in creating an estate plan that addresses the challenges of multi-state home ownership. Hiring Attorney Inna Fershteyn will provide you with peace of mind knowing your estate plan is in capable hands. Consult with Attorney Inna Fershteyn today and contact the Law Office of Inna Fershteyn at (718) 333-2394.