A decedent owned tangible property in at least one other state (other than the state in which he or she lived).
Specific estate planning devices have not been put in place for the property in another state.
In these situations, the second probate case is referred to as ancillary probate. While ancillary probate may be necessary in some cases, often, it is possible to avoid a second probate with the right estate planning ahead of time.
A second probate case in another state will be handled according to the laws of that state. For personal representatives or executors, that typically means that:
They have to file the paperwork to open up the ancillary probate case: State laws will dictate the deadlines for filing. In some cases, executors may be able to file letters of authorization from the state where the first probate case was handled in order to skip some initial steps in the ancillary case.
The second probate case will come with its own fees: This includes all-new court filing fees. If property has to be inventoried and appraised as part of the ancillary probate case, there will be costs associated with these needs as well.
The ancillary probate case can also have its own estate taxes: Ultimately, this can mean that estate taxes have to be paid in each state where a probate case is opened.
Beyond these costs, complex ancillary probate cases can also bring more creditors to deal with and other responsibilities to fulfill. Ultimately, these cases can end up being huge drains on executors, beneficiaries, and the estates at the center of these matters.
A little planning before a death can go a long way towards minimizing probate obligations and, in many situations, helping loved ones avoid probate altogether. For those who do own tangible property in more than one state, some options for avoiding ancillary probate can include (and may not be limited to):
Setting up trusts: Assets held by trusts can bypass probate and be distributed to your chosen beneficiaries according to your wishes. When a trust is set up, assets in other states will need to be transferred into the ownership of the trust in order for this option to be effective.
Completing “transfer upon death” (TOD) designations: Also referred to as pay on death (POD) designations, TODs will automatically transfer property to a chosen beneficiary upon your passing. That means assets with TOD and POD designations won’t be part of a probate estate (if probate is opened). Bank account holdings and vehicles are just a few types of assets that can bypass probate with a beneficiary designated for the POD or TOD.
Jointly owning property: When property is jointly owned and one of the owners passes away, that property will automatically be transferred to the other party, who will become the sole owner. Jointly owned property won’t go through probate when at least one owner is still alive.
The best options for probate avoidance—in one or several states—will depend on your circumstances, needs, and objectives.
Contact a Denver probate lawyer at Evans Case, LLP. With more than a century of combined experience, our team is highly skilled at guiding clients through every phase of estate planning and probate, from drafting wills and trusts to initiating and resolving probate cases.
Call (303) 757-8300 or contact us online for a free 30-minute consultation and important answers about Colorado probate and estate planning.
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