Ancillary probate, also known as supplemental probate, is a public legal proceeding that is required when the deceased person owned real estate or tangible property located in a state other than the state in which the decedent was domiciled at death. In these circumstances, an ancillary probate proceeding is required to transfer title to the out of state property.
If probate is not required in the state of decedentís domicile, then the probate opened in another state because of decedent's out of state property is not called ancillary.
Examples of types of property that may require your executor to file an ancillary probate include rental properties, vacation homes, timeshares, and boat slips located outside the state of your principal residence.
Ancillary Probate Advantages
While there are several reasons to plan your estate in a way that avoids ancillary probate, you may want to consider the advantages of probate before executing your estate plan. Depending on your unique circumstances or concerns, you may decide it would be better for your out of state property to pass through probate. The advantages of ancillary probate include the following:
1. Ancillary probate provides a formal process to resolve creditor claims. It requires that creditors receive notice and the opportunity to seek payment before heirs or beneficiaries receive an inheritance.
2. Ancillary probate allows estate property to be sold to a buyer that can be assured creditor claims were cleared during the process.
3. Ancillary probate provides a formal process to resolve disputes among heirs, including disagreements about the distribution of estate property.
4. If you are concerned about the executor performing the duties of estate administration properly, probate ensures the actions of the executor will be reviewed or monitored by the probate court.
5. If you are concerned that some of your living heirs may be difficult to locate, probate provides a process to resolve potential inheritance claims.
Reasons to Avoid Ancillary Probate
There are many reasons you may want to plan your estate in a way that avoids the requirement for ancillary probate.
1. If your will or living trust places the responsibility of being executor on your child, sibling, parent or close friend, having to administer a probate in multiple states will be an additional burden on that person. Completing the probate process means filling out forms and complying with requirements that are sometimes difficult. If the person you plan to name as executor does not have the time or skills to complete this process, you may want to avoid ancillary probate.
2. Opening a probate proceeding in another state means additional costs and may substantially increase the legal fees owed by your estate. Since these legal fees and costs must be paid before your heirs receive an inheritance, ancillary probate could result in your children, grandchildren or other beneficiaries receiving a much smaller distribution from your estate.
3. Ancillary probate may increase estate taxes owed by your estate. If you own out of state property, your estate can be subjected to the estate tax laws of the state where such property is located. Paying estate taxes will further reduce the amount that will pass to your heirs and beneficiaries.
How to Avoid Ancillary Probate
There are many different ways to avoid ancillary probate of your estate. However, the best estate planning strategy for you depends on your unique circumstances and goals. If you want to avoid ancillary probate of your out of state property, the following is a list of options to consider:
1. Make a Revocable Living Trust. Placing property in a living trust allows you to pass it to beneficiaries without going through probate. One of the disadvantages of this estate planning method is there are many steps you must complete to fund the living trust, such as executing a trust transfer deed for real estate you want put in the trust. See our free Guide to Living Trusts.
2. Make Another Type of Estate Planning Trust. Depending on the particulars of your estate, you may want to consider other types of estate planning trusts rather than making a basic revocable living trust. These types of trusts also offer the advantage of avoiding ancillary probate. See our list of other types of trusts.
3. Change Title to Joint Tenancy. If you own out of state property and want to pass it to your heirs without probate, one option is to change title to joint tenancy. Joint tenants is a method of holding title that avoids probate. Before deciding to use joint tenancy to avoid probate, consult an attorney about the risks of joint tenancy.
4. Sell Out of State Property. Many people decide to sell out of state property to avoid the costs and time burdens associated with ancillary probate. If you are considering this option, consult a tax professional about capital gains taxes, as well as the other tax and financial ramifications of selling your property to avoid probate.
Probate of Out of State Property
If you are the executor or personal representative of an estate that has out of state property, there are several steps you need to take. First, determine how to file a probate in the state where such property is located. Information on how to probate an estate is also available in our free probate guide. While you can reduce legal fees to some extent by becoming familiar with the probate process, in most cases you will need to hire a probate lawyer. A probate lawyer can assist you with settling the estate according to the laws of the state where decedent was domiciled, as well as retaining an out of state probate lawyer to handle the ancillary probate.