If you own property in two different states, your estate plan needs to account for the property’s locations. Estate planning is affected primarily because your estate may need to open a probate proceeding in more than one state, which can be time-consuming and expensive.
Why Does It Matter If You Own Property in More than One State?
In general, the state and local areas where real property is located oversee property ownership – including recording and transfers, tax collection, and resolving property disputes. If you pass away in California while owning real estate in both California and Oregon, a California probate court most likely cannot oversee the Oregon property’s distribution to your heirs. Instead, an Oregon probate court would have jurisdiction. As a result, you might need two different probate proceedings in California and Oregon.
Please note that the probate court jurisdiction rules refer mostly to real estate, such as land, houses, and commercial buildings. Often, a probate court in one state can oversee distribution of personal property, cash, or investments located in another state because these items are not fixed in its location. Personal property includes jewelry, furniture, keepsakes, and more. (One exception may arise if you keep valuables in a local bank that has no branches outside the state.)
How Can Estate Planning Help You?
Many people who own property in multiple places take advantage of estate planning tools. These tools may help them reduce the number of needed probate proceedings, save money and time, and potentially lower taxes. For example, you could consider placing your property in a trust or holding company.
A trust allows a trustee (yourself or a trusted advisor) to manage and control property for the benefit of chosen beneficiaries. As long as you cede all control over the trust and the property in it upon your death, the property most likely will not have to go through probate. Your beneficiaries can receive the property right away, or the trust can continue to manage it for them. Talk to an estate planning attorney about whether a trust is right for you and how to set it up.
Another option to consider is forming a real estate holding company. A business entity such as a corporation or limited liability company that legally owns the property can shield you from personal liability for it while providing probate and tax advantages. Forming an entity also can protect you if you have partners or if you do not wish certain family members to inherit the property. Again, speak to an estate planning attorney about your options.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.