Contact Us Today! (949) 305-8642


How to Handle Out-of-State Property in Your Estate Plan

Posted by James Burns | May 16, 2024 | 0 Comments

When planning your estate, dealing with out-of-state property can introduce a layer of complexity often overlooked. According to a 2021 study by ATTOM Data Solutions, approximately 11% of American homeowners own property that lies outside their current state of residence. Managing these assets effectively in your estate plan is crucial to avoid legal pitfalls and ensure your wishes are honored.

1. Understanding Legal Jurisdiction

Actionable Tip: Consult with an estate planning attorney who is knowledgeable about the laws in both the state where you reside and the state where your property is located.

Mistake to Avoid: Assuming the laws of your home state automatically apply to your out-of-state property. Each state can have vastly different laws governing estate planning and property rights.

Example #1: Consider a homeowner in California with vacation property in Nevada. Because probate laws vary significantly between these states, without proper planning, this could lead to a separate probate process in Nevada, complicating matters. Under California Probate Code Section 12501, if the out-of-state property is not placed in a trust or otherwise properly planned for, it could lead to unnecessary legal proceedings.


Example #2: A homeowner in California with a vacation home in Arizona needs to consider Arizona's unique probate and tax laws. If the California homeowner assumes California probate laws apply to the Arizona property, their heirs might face unexpected legal challenges and expenses.


2. Creating a Revocable Living Trust

Actionable Tip: Place the out-of-state property in a revocable living trust. This can avoid the need for ancillary probate, a separate probate proceeding for out-of-state property, which can be time-consuming and expensive.

Mistake to Avoid: Neglecting to retitle the property in the name of the trust after creating it. This oversight can render the trust ineffective for the out-of-state property.

Example: If John, a resident of Aliso Viejo, California, owns a ski lodge in Colorado, transferring the lodge into a trust can prevent the Colorado property from going through Colorado's probate system, which differs markedly from California's.


3. Coordinating State Laws

Actionable Tip: Ensure that your estate documents, like powers of attorney and healthcare directives, are recognized in the state where your property is located.

Mistake to Avoid: Using generic estate planning documents that may not comply with specific state requirements.

Example: A healthcare directive drafted according to California law might not be valid in Florida if it lacks certain language or formalities required by Florida law. Under Florida Statutes, Section 765.202, specific requirements for execution and witnesses are laid out, which may differ from California's statutes.

4. Tax Considerations

Actionable Tip: Consult a tax advisor to understand potential tax implications in different states, especially those with estate or inheritance taxes. Understanding the interplay between state-specific tax laws and federal tax obligations can help minimize the overall tax burden on the estate.

Mistake to Avoid: Ignoring the potential for tax liabilities in states with estate or inheritance taxes, which can significantly reduce the value of the estate passed on to heirs.

Example: While California has no inheritance tax, if an individual owns property in a state like New Jersey, their estate might be subject to state taxes, which can be as high as 16% depending on the value of the estate. Additionally, if the property's value appreciates significantly, there could be substantial capital gains taxes if not properly planned for.

5. Regular Updates and Reviews (Expanded)

Actionable Tip: Regularly update your estate plan to reflect changes in state laws and personal circumstances, ideally every three to five years or after major life events like the purchase of new property or changes in marital status.

Mistake to Avoid: Letting your estate plan become outdated, which can cause discrepancies and challenges in the execution of the estate. Regular reviews can catch these issues before they become problematic.

Example: Michael purchased a new vacation home in Oregon but didn't update his estate plan to include this property. This oversight could lead to significant legal complications for his heirs. Additionally, changes in Oregon's property laws might affect how his property should be handled, which only periodic reviews can address.

Call to Action
Handling out-of-state property in your estate plan requires careful consideration and strategic planning. At the Law Office of James Burns, we bring over 24 years of dedicated experience to ensure your estate planning needs are met with the highest level of expertise. Whether you're in Aliso Viejo, Orange County, or any other part of California, we understand the intricacies of state-specific estate laws. Don't navigate this complex field alone. Call us at (949) 305-8642 or visit our website at to secure your legacy across state lines.

Out-of-state properties can complicate estate plans, but with the right strategies and expert advice, you can ensure a smooth transition of your assets to your heirs. Protecting your estate's multi-state assets is not just about legal compliance; it's about peace of mind for you and your loved ones. Don't wait—plan wisely today.

About the Author

James Burns

Estate Planning, Asset Protection, Business and Real Estate Transactions, nutraceutical Law and franchising:


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment