Will Your Second Home Go Through Ancillary Probate?
The joy of spending time at an out-of-state vacation home is immeasurable. Not only does it offer an opportunity for relaxation and making cherished memories, but it’s also a solid financial investment.
However, owning property in another state can create complexities in estate planning, notably the issue of ancillary probate. Let’s unpack this topic and explore how a revocable living trust can offer a seamless solution.
What is Probate and Why Does It Matter?
Probate is the legal process your estate undergoes after your death if you’ve created a will. Your named executor takes on the responsibility of administering your estate under court supervision. The process involves identifying your assets, settling debts, paying taxes, and ultimately distributing assets to your heirs.
While probate isn’t inherently negative, it has drawbacks. It’s often time-consuming and incurs expenses, such as legal fees and court costs, that diminish the value of your estate.
The Complication of Ancillary Probate
Owning out-of-state property adds an extra layer of complexity: ancillary probate. If you have property in a state other than your primary residence, ancillary probate kicks in, necessitating a separate probate process in that state. For instance, if you reside in Oklahoma but own a vacation home in Florida, both states’ probate laws come into play when you pass away.
This additional process not only prolongs the time it takes to settle your estate but also increases the expenses involved, effectively eroding the financial legacy you aim to leave behind.
The Revocable Living Trust as a Turnkey Solution
Fortunately, there’s a way to sidestep these complications: setting up a revocable living trust. Contrary to some misconceptions, creating a trust doesn’t mean surrendering control over your assets. With a revocable living trust, you maintain full control and can alter or dissolve the trust as you see fit.
Here’s how it works:
1.) Creation: You set up the trust and transfer your assets into it.
2.) Control: You act as the trustee during your lifetime, maintaining complete control over your assets.
3.) Succession: You name a successor trustee who takes over upon your death or incapacitation.
4.) Asset Distribution: The successor trustee distributes the assets as per your directives, entirely bypassing the probate process, both in your home state and any other states where you own property.
Additional Benefits
Beyond avoiding probate, a revocable living trust offers further advantages:
Streamlined Administration: Consolidating assets within the trust makes it easier to manage them.
Controlled Distributions: You can specify terms for asset distribution, providing a structured financial plan for beneficiaries.
Download Our Free Estate Planning Worksheet!
We place an emphasis on education because we find that people tend to take the right steps to protect their loved ones when they fully understand the importance of the process. You can explore all of the written materials that we have on this site free of charge, and we would like to recommend our estate planning worksheet in particular.
This handy tool will give you a better understanding of the subject, and it is simple to go through it. Once again, this is a free resource, and you can visit our worksheet access page to get your copy.
Need Help Now?
If you have already learned enough to know that you should work with an Oklahoma City estate planning lawyer to put your plan in place, our doors are open. You can send us a message to request a consultation, and we can be reached by phone at 405-843-6100.
We also have a location in Tulsa, and if that office is more convenient for you, the number there is 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.
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