Estate Planning for Real Property Located Outside of the State of Florida
Any real property located outside of the state of Florida has to specifically be planned for in an individual’s or married couple’s estate planning. This is the case because, in most states, such property will have to go through probate if left in an individual’s name. This process is called ancillary probate. Ancillary probate is filed in addition to the probate that is filed in the state where the decedent resided.
There are certain planning options an individual has with regard to such real property. First, it is important to understand the process of estate planning and the documents involved. The basic estate plan includes incapacity planning documents, a last will and testament and a revocable living trust (in most cases). Incapacity planning documents include the durable power of attorney for health care, the durable power of attorney for finances, and the living will (do not resuscitate).
There are two common options to avoid ancillary probate. First, an individual may deed the out-of-state real property to a revocable trust. The revocable trust then dictates how the property should be distributed within the four corners of such instrument. Properly deeding real property into a revocable trust must be done under the formalities of the state where the property is located. For instance, if the real property is located in New Hampshire, then a New Hampshire deed must be prepared to properly effectuate the transfer.
The second option for probate avoidance is deeding the property into a limited liability company (“LLC”), which has special provisions in its operating agreement and corporate documents that allow the company’s assets to avoid probate. This option is certainly more complicated than the first (and more costly), therefore, it is not the best option for everyone. However, the LLC is a great tool for asset protection. It is extremely important to have specific language in the corporate documents allowing the LLC shares to avoid probate (such as the right of redemption and/or the first right of refusal at the death of a member).
Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.