When designing an estate plan, few questions are more important to answer than where your real properties are located. Every state has its own laws regarding property, land, and especially estates, meaning that an effective plan must take these differences into account to work as designed. Indeed, failure to adhere to every state’s rules can result in additional time and money spent when trying to close an estate, or even the property going to the wrong person. At a time when people are already struggling with the passing of a loved one, dealing with the intricacies of interstate law is often the last thing anyone wants to think about, making it crucial that one’s estate plan anticipate these problems and act accordingly.
What is (and is not) Real Property?
Real property refers to land that someone owns and anything permanently fixed to it. It is essential to distinguish this from property generally because each category has different estate rules. If you or a loved one owns a home, open land, or even a permanently affixed trailer, it will be considered real property under estate law. On the other hand, almost anything else will be treated as personal property, even if it is titled and stored in another state. While there is some complexity on a state-by-state basis, these rules are relatively universal, making them crucial toward understanding whether a person needs to interact with the estate system of another state.
Real property, or real estate generally, will always be governed by the rules of the state where the property is located. On the other hand, personal property is typically administered only with letters of authority from the primary residence state. While this is not always the case, in North Carolina, only real property will ever require ancillary probate. In South Carolina, only personal property titled in that state without another transferring document, such as joint ownership, will require ancillary probate.
What is Ancillary Probate?
Generally, whoever is administering an estate, the personal representative, will qualify based on the county and state where the deceased had their permanent residence before death. This status will give them the authority to handle any of the estate’s legal matters and direct the movement of its property within the qualifying state. Outside that state, however, the personal representative will not automatically have the authority to make those transactions owing to each state’s differing laws. Instead, the personal representative must qualify for ancillary probate, a process that, similarly, varies state-to-state.
Ancillary probate is essentially a secondary probate that one opens by applying to become the deceased’s personal representative in another state. This process means going through all the same stages as one normally would with a one-state probate, from application for letters to annual accountings. When most people consider that being the personal representative for an estate in one state is a taxing and sometimes frustrating responsibility, it is hardly surprising that serving in two only magnifies this issue.
To complete the ancillary probate process, the personal representative must follow the laws of that state to distribute the real property in question. When someone dies with a will, this is typically not an issue provided it is found valid under the laws of both states. However, should the will be invalid, or should the person die without one, then state intestacy laws will apply to direct the distribution of a person’s assets, regardless of any other wish they may have had. Like the rest of estate law, every state has its intestacy statute, which may differ significantly from one to another.
To illustrate, in South Carolina, a surviving spouse is entitled to the entire intestate estate if there are no surviving issue of the decedent, and one-half if there are. In North Carolina, the law is far more complex. Still, to simplify, a surviving spouse may only receive one-third interest in any real property if the decedent had two or more surviving issue. Suppose one dies intestate while residing in South Carolina but owning a property in North Carolina. In that case, the latter property will be subject to those differing laws during one’s ancillary probate proceedings.
How Can You Prevent This?
Concerns over post-death administration are no reason to sell one’s vacation house.. Indeed, with capable estate planning, an attorney can work to negate the issue entirely. Depending on one’s situation, joint ownership or a trust may be vehicles to avoid the ancillary probate process, streamlining the administration process and allowing your personal representative to focus on the important things in the wake of losing a loved one.
At King Law, we understand that you would prefer to spend your golden years enjoying your secondary property rather than fretting about its probate expenses. We will work with you to understand your goals and determine which form of estate plan will work best for you, based on the law of both your residential state and any other state where you own property. Contact us at (888)748-5464 or visit our website to speak with one of our skilled attorneys about your case and start planning now.
