For many families in Western New York, owning a vacation property and spending winters in a warmer climate is dream come true. Owning out-of-state real estate is a hallmark of success. However, from a legal perspective, owning property across state lines can create a nightmare for your heirs and require lengthy court proceedings in two states if not handled correctly.
The Hidden Cost of Ancillary Probate
Most people assume that a New York Will covers all their assets globally. While a Will is generally valid across state lines, the authority of a New York court ends at the state border.
If you own real estate in another state, your executor will likely have to open a second, separate legal proceeding in that state known as Ancillary Probate. This means hiring a second attorney, paying a second set of court fees, and potentially doubling the time it takes for your family to settle your affairs. For a family already grieving, the administrative burden of managing two court systems can be overwhelming. However, with proper planning you can avoid these headaches and expenses.
Keeping Your Legacy Seamless
- The Revocable Living Trust: Moving your out-of-state real estate into a New York Revocable Living Trust shifts ownership from you personally to the trust entity. Since this trust legally continues after you pass away, the property transfers directly to your loved ones. This approach bypasses the court system entirely, ensuring a private and immediate inheritance, regardless of the property’s location.
- Strategic Titling: Changing how you hold title can also help. In places like Florida, using “Joint Tenancy” (co-ownership) or special “Lady Bird Deeds” allows property to transfer automatically upon death. These tools help your family avoid probate court complications. However, because real estate laws vary significantly by state, you must verify which options work for your specific situation.
- Cross-Border Tax Awareness: Owning property across state lines requires looking beyond just the deed; you must watch for taxes. It is vital to check for capital gains taxes in both locations and understand New York’s specific estate tax rules. Plus you may want to take advantage of “Homestead” tax exemptions. Proper planning now prevents your heirs from facing unexpected, heavy tax bills that could reduce their inheritance later on.
Why Local Expertise Matters for Out-of-State Assets
Western New York has a unique relationship with out-of-state property, particularly with neighbors in Canada and the popular Snowbird destinations. Handling these assets requires an attorney who understands the interplay between New York’s strict probate rules and the laws of your second home state.
Don’t let your vacation home become a legal burden for your heirs. Whether you are buying a new property down south or looking to update your current New York plan, our team at Voelkl Law PC provides the sophisticated, tax-minded counsel you need. Protect your global assets today. Call 716-633-4030 to schedule a consultation today and take the next step toward securing your legacy for the people who matter most.
