Dealing with the Beach Condo By: Marianna Chaet, Esq.

We all like to get away. Many people purchase out-of-state vacation properties to do just that. They often consider the tax consequences of the purchase, but do not give much thought to the effect it will have on their estate planning.

If a person passes away with real estate in his or her name, then their Executor may have to get authority to act on behalf of the estate in that particular state. Some states accept the doctrine of “muniments of title,” which means they accept the home state’s probate and do not require a new probate for the Executor. Other states require the Executor to open a second probate matter entirely. In either case, the Executor has to deal with multiple attorneys in multiple states to transfer the property.

A common way to fix this problem is to create a trust and record a deed placing the out-of-state property into the trust. The property owner still has full control of the property during his or her lifetime as trustee of his or her trust. However, when he or she passes away, the property flows outside probate because it is in the name of the trust. The successor trustee can then deal with the property without having to open multiple probates.

If a person owns property in multiple states without a trust then the Executor’s job becomes exponentially more expensive and time consuming as he or she has to get court permission to act in multiple states. Putting out-of-state property into a trust saves that person much time and headache.

 

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