People move around much more these days than they did decades ago, and are more likely to have rental or vacation property outside the state where they live. These facts, in addition to the reality that children grow up and often move several states away from their parents, means that an increasing number of people are inheriting far from where they reside. Here’s what to do if you inherit real property out of state.
If a person dies owning assets and/or real property titled in their own name, upon their death, a probate estate will need to be opened where they reside or that real property is located—the “main” probate estate. However, if that person also own real property in a state (other than the one where the deceased resided) and the deceased person held title in their own name, that property will need to pass through probate in the state where the real property was located. That is known as “ancillary probate,” as it is ancillary to the main probate proceedings in the deceased person’s home state.
Depending on what state the property is located in, the size of the estate in general, and where family members are located, going through ancillary probate can be a time-consuming and costly process. At the very least, it will require an executor based in a different state to hire a local attorney to assist with the ancillary probate process. In some states, the law requires a resident of that state to act as an agent on behalf of an executor who lives elsewhere.
Things get even stickier if there is property in multiple states. Let’s say the deceased lived in Ohio, had a vacation cottage in Michigan, and a timeshare in Florida (yes, even timeshares may need to go through probate). Now let’s say you are the child and executor of the deceased and live in yet another state. You could find yourself juggling three separate probate cases: the main probate case in the county where the deceased lived, plus ancillary probate in Michigan and Florida.
If the deceased left behind property in Michigan, and the executor or personal representative of the estate lives elsewhere, what kind of assistance do they need to resolve Michigan probate issues?
The good news is that Michigan does not place as many limits on who may serve as executor of an estate as many other states do.
The good news is that Michigan does not place as many limits on who may serve as executor of an estate as many other states do. You can still serve as executor of an estate involving Michigan real estate even if you live outside the state. What you will need, however, is competent help “on the ground” in Michigan. That means a reliable probate attorney who practices primarily in the county where a probate case will need to be filed.
What to look for in an attorney? Preferably someone with years of probate experience and whose practice regularly handles estate administration cases. You want someone who will handle your probate filings efficiently and without mistakes.
You also want an attorney who is responsive. Since you are out of state, you are relying on your probate attorney to serve as your eyes and ears. He or she is the only way you will know what is going on in the Michigan probate matter. Someone who answers your calls promptly and keeps you posted as to the status of the case is essential.
If dealing with probate in multiple states sounds like something you’d rather avoid, there is good news—as long as the property owner is still alive and able to make an estate plan. A relatively simple and straightforward option can bypass the probate process altogether, eliminating the need to deal with multiple attorneys and courts.
Real estate, wherever located, can be placed in a simple living trust. The owner of the property can transfer the property to the trust, and serve as both trustee and beneficiary during his or her lifetime. Nothing will change except the name in which the property is held: “The John Q. Smith Revocable Living Trust” instead of “John Q. Smith.”
The trust can be revoked at any time that the creator (also called the grantor or settlor) is alive and competent to do so. If the trust is not revoked during the grantor’s lifetime, it becomes irrevocable. The person named as the successor trustee can simply distribute the property contained in the trust to the successor beneficiaries.
Let’s go back to that example of the person who lived in one state and had property located in two others. He could create a trust and deed all of the property to the trust. At the time of his death, his successor trustee (you) would instantly have the authority to manage and distribute the property according to the terms of the trust. No court involvement would be required. What’s more, other assets might be placed in the trust, too, perhaps allowing probate to be bypassed completely.
If this sounds to you like a better way to do things, you’re right. We invite you to contact our law office to schedule a consultation to learn more about trusts and how they could simplify the transfer of real estate for you or someone you love.
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