Three Ways Of Avoiding Ancillary Probate

If you have properties in two states, you are looking at the possibility of an ancillary probate, which means the execution of more than one probate process. That would be a waste of resources. Fortunately, there are ways of avoiding probate in the second state to minimize the assets due to your beneficiaries and ensure they get it in time. Here are three examples of what you can do to achieve that:  

Create a Simple Living Trust

A living trust is an arrangement that allows you to set aside assets for a specified beneficiary. With a simple living trust, you are both the grantor (the person who sets up the trust) and trustee (the person who manages the trust). You can add or remove assets from the trust at will. If you die, the assets in the trust funds go to your beneficiaries without passing through probate. 

This is a good option if you have a few assets outside the state and don't want an ancillary probate for them. For example, if you have a beach house in a different state, you can put it in a trust and name the person you want to inherit the beach house as the beneficiary of the trust.

Use a Transfer-On-Death Deed

You can also create a transfer-on-death (TOD) deed for out of state properties, so they don't have to go through probate. A TOD is just like any other real estate deed that transfers property from one person to another; the main difference is that the transfer only happens after you die. For example, to leave your loved one a condo in a different state, you just create a TOD for the property and name your loved one as the beneficiary; your loved one automatically gets the condo upon your demise.

TODs have special state rules that you must follow to make a TOD valid, and these rules change a lot. Therefore, engage an estate planning attorney to help you create the TOD and make sure it's legally valid. Unfortunately, not all states allow this kind of property transfer.

Make the Beneficiary a Joint Tenant

Lastly, you can also make your loved one a joint tenant of the property, and it will not pass through probate. If you are joint tenants of the property, you lose all interest in the property when you die, and the surviving joint tenant gets your share; effectively owning the whole property. Talk to a lawyer (such as one from Hurth Sisk & Blakemore LLP) for the creation of a joint tenancy with the right of survivorship is this is your preferred arrangement.  

Share