Do you own real estate outside of Indiana? Are you considering buying real estate outside of Indiana? If so… [I know, that sound like the beginning of an awful legal or mortgage advertisement—because I heard one this morning and it’s unfortunately stuck in my head, still]. Okay, let’s try this again.
In my experience, it’s not uncommon for people to live here in the Hoosier state, and also own additional real estate across state lines. However, when it is the case, we need to pay special attention to it while we go through the estate planning process so that out-of-state property is properly accounted for in your plan. Here’s an example that has happened more times than once when meeting with a family for the first time:
Someone dies (let’s call them “D”), the services have concluded, and the family now meets with me for the “now what do we do” discussion. We review all planning documents. We start reviewing assets; house, various financial accounts, car. Then it comes up [insert dramatic 3 drum beat, bom, bom. bom; sorry, that commercial is still stuck in my head]. Someone asks, “Has anyone checked the condo in Florida. A family member, with a tone of great responsibility, then proclaims, “The condo is fine. We all know what that place meant to D, and it’s all taken care of. I’ve informed D’s friends/neighbors, they’re sad, and have assured me they’ll make sure everything remains in good shape and no one mysterious is snooping around.” Ah, the sigh of relief from the family, and I smile as to say thanks because that is an important factor [though I’m thinking, darn, now I get to deliver the bad news].
The condo, like the house here, was owned solely by D. Now what do we do? We’ll need to open a probate estate to finalize D’s affairs. The family anticipated this, though a couple eyes roll. We’ll also need to contact an estate lawyer in Florida—this is called Ancillary Probate. “You mean we have to hire another lawyer? [all eyes rolling now]” Yes, you need a lawyer licensed in Florida to handle the condo there. Someone says, “Ancillary Probate, that sounds like a technicality—don’t you know how to “get around” these technicalities?”
It’s not a mere technicality. There is a way to get around it. You prevent it—by planning and discussing the options. A common option, a trust, is an effective estate planning tool used to prevent situations just like this. Trusts aren’t “just for rich people,” and the expense of setting one up often pales in comparison to the consequences of owning real estate in multiple states at your death.
I hope this message came across well, both here, and across state lines.
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