Understanding Probate Law: Ancillary And Its Legal Complexities

Ancillary probate is a legal process that takes place when a non-resident passes away while holding property in a state other than their home state. This process is required when a decedent owned real estate or tangible personal property in another state. The laws of the state where the property is physically located govern what happens to that property when the owner dies, not the laws of the state where the decedent lived at the time of death. This means that two or more simultaneous probate proceedings must take place, leading to increased costs and time for the beneficiaries.

When is ancillary probate necessary?

Ancillary probate is a secondary probate proceeding that is required when a decedent owns property in a state other than their home state. This includes real estate and tangible personal property such as cars, boats, or airplanes that are registered and titled out of state. It can also apply to mineral rights attached to real estate in another state.

Ancillary probate becomes necessary when a person dies with property in multiple states. The primary probate proceeding typically occurs in the decedent's state of residence, and the ancillary probate proceeding occurs in the state where the additional property is located. The laws of the state where the property is physically located govern what happens to that property when the owner dies, not the laws of the decedent's home state.

For example, if a resident of Oregon dies, the main probate would occur in Oregon for their personal property and any Oregon real estate. If they also owned real estate in California, the California real estate would be handled with ancillary probate in California.

Ancillary probate can increase the costs of settling the estate, including additional court fees, accounting fees, and attorneys' fees. It can also result in a longer process for beneficiaries to receive their inherited property.

To avoid ancillary probate, individuals can consider retitling their out-of-state property or placing it in a living trust. By doing so, the property can pass directly to beneficiaries without the need for probate.

What is the process of ancillary probate?

Ancillary probate is a secondary proceeding required in another state from the original probate proceeding. This process is necessary when a decedent owns property in more than one state. Since each state has different property laws, a probate proceeding must be made in each state where the property is located.

The primary probate proceeding is usually held in the decedent's state of residence, where the validity of the will is verified, and an executor is named. However, a state probate court only has jurisdiction over property within its jurisdiction and cannot issue orders related to property located in another state.

Once the domiciliary probate process is initiated in the decedent's state of residence, the executor may open ancillary probate in the state where the additional property is owned. This is considered a secondary probate proceeding meant solely for handling out-of-state property. Ancillary probate is typically an abbreviated process of the primary probate process, and some states provide executors a bypass to streamline the procedure.

The process of ancillary probate varies from state to state. For example, in California, ancillary probate is defined as "proceedings in this state for administration of the estate of a non-domiciliary decedent." A non-domiciliary decedent is someone who dies while "domiciled in a sister state or foreign nation."

Ancillary probate can increase costs for the estate, including additional lawyer fees, court costs, and filing fees. It can also result in a longer process, causing beneficiaries to wait longer for their inheritance.

What are the consequences of ancillary probate?

Ancillary probate can have several consequences, the most notable being the increased costs and fees associated with the process. As it involves an additional, simultaneous probate process in a different state, there may be a need to hire another lawyer who is licensed in that state, leading to higher expenses. This can include additional court costs, filing fees, accounting fees, and attorneys' fees, which can deplete the financial reserves of the estate. Consequently, beneficiaries may receive less inheritance as a result of these extra costs.

The process can also result in delays, as it takes time to initiate and complete the ancillary probate proceedings. This may prolong the time it takes for beneficiaries to receive their inherited property.

Furthermore, in cases where there is no will, ancillary probate can be more complex due to varying intestate succession laws across different states. This can lead to conflicts and disputes over who inherits the out-of-state property, potentially resulting in litigation and causing confusion and delays.

Additionally, ancillary probate may require the executor to spend additional time and effort in managing the estate. They would need to file for probate in each state where the decedent owned property, which can add stress and pressure to their responsibilities.

How can you avoid ancillary probate?

Ancillary probate is a secondary probate process for property owned in a state outside the deceased person's home state. It is a costly and time-consuming process that can be avoided through proper estate planning. Here are some ways to avoid ancillary probate:

Joint Ownership

If you own property jointly with another person through joint tenancy with the right of survivorship, tenancy by the entirety, or community property with the right of survivorship, the property will automatically pass to the surviving owner without the need for probate. This type of ownership is commonly used for real estate, bank accounts, vehicles, and other valuable assets. However, it's important to note that the surviving owner's creditors, divorcing spouse, or bankruptcy proceedings may now have access to the jointly owned property.

Transfer-on-Death (TOD) Deed

A few states allow you to file a transfer-on-death deed or beneficiary deed, which only takes effect upon your death. This allows you to retain complete control over the property during your lifetime and revoke the deed if necessary. The named beneficiary automatically receives ownership of the property upon your death, bypassing the need for probate. However, similar to joint ownership, the property may be vulnerable to the beneficiary's creditors.

Revocable Living Trust

By transferring the title of the out-of-state property into a revocable living trust, you can avoid ancillary probate. The trust, not the individual, owns the property, and since the trust continues after the grantor's death, probate is not required. If desired, you can also transfer your in-state accounts and property to the trust to avoid probate altogether. Naming yourself as the trustee allows you to maintain control over the property and revoke the trust at any time during your lifetime. Upon your death, the successor trustee will distribute the property according to your wishes.

Proper Estate Planning

Through proper estate planning, you can ensure that your property is titled in such a way that it can pass directly to your beneficiaries without the need for ancillary probate. This may involve retitling out-of-state property or utilizing special beneficiary deeds that allow for the transfer of property at death without probate.

What is a 'domiciliary' state?

A domiciliary state is a legal term that refers to the state where a person has their permanent place of residence or domicile. It is the state that an individual considers their home, even if they are not currently living there. The concept of a domiciliary state is important in various legal contexts, including taxation, estate planning, and probate.

In the context of ancillary probate, the domiciliary state is the state where the decedent had their permanent residence at the time of their death. Ancillary probate is an additional probate process that is required when a person owns real estate or tangible personal property in a state other than their domiciliary state. For example, if a person lives in Pennsylvania but owns a piece of real estate in New Jersey, their domiciliary state is Pennsylvania. If they die, the primary probate proceeding will take place in Pennsylvania, but an ancillary probate proceeding will also need to take place in New Jersey to deal with the out-of-state property.

The laws of the state where the property is located typically govern what happens to that property when the owner dies, not the laws of the domiciliary state. This means that the domiciliary state does not have the legal jurisdiction to transfer property located elsewhere to beneficiaries. Therefore, an additional ancillary probate proceeding is necessary in the state where the property is located.

The process of ancillary probate can vary from state to state, and it can increase the costs of settling the estate, including additional court fees, accounting fees, and attorneys' fees. However, state courts often cooperate with each other to make the dual process as smooth as possible.

In summary, the domiciliary state is a key concept in ancillary probate, as it refers to the state where the decedent considered their permanent home, and it is in this state that the primary probate proceeding will take place. However, if the decedent owned property in another state, an ancillary probate proceeding will also be necessary in that state to deal with the distribution of the out-of-state assets.

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