How Owning Property in another State Affects Your Estate Plan
Florida is commonly considered a state that a person moves to for work or retirement, but is not generally viewed as a place where many people are born and grow up. In fact, only 36 percent of Floridians are native to the state, according to the most recent numbers released in 2012. Most transplants come from outside the continental United States, most likely Puerto Rico, and New York. Given that the majority of Floridians move to the state from somewhere else, the likelihood that many residents own property in other states is quite high. When one also considers that many people end their lives in Florida, and will consequently have their estate administered after death, it becomes very important to understand how out-of-state property affects the type of estate plan a person should implement. The recent death of pop star Prince, who had no type of estate plan in place, serves as an example of why these documents are so crucial. The more complex your property holdings are, the greater the need is for an estate attorney to review and assess the best way to protect your assets for any heirs.
A domicile is the place a person primarily lives, commonly called the home state, and determines which state has the authority to tax them for income earned or the property value of a person’s estate. A person can only have one domicile at a time, and this situation can be particularly tricky for those that live in different states for roughly the same amount of time during the year, a common occurrence for those living in Florida. For estate planning purposes, it is often necessary to assess which state offers the person the best tax advantages, and then decide if it is worthwhile to change domiciles. Note that Florida does not have a state income or inheritance tax. In order to change a domicile, a person must take steps that demonstrative clear evidence of intent to change the home state. Examples of actions someone can take to change domiciles includes selling a home in one state and purchasing a new home in another, changing a driver’s license, or registering to vote in the new state.
Probate is the legal process a person’s estate may have to go through in order to distribute property to his/her heirs. Typically, this is something to avoid because it adds a lot of time and expense to the settling a person’s estate, and will reduce the amount available for distribution to heirs due to the costs related to court hearings, attorneys and personal representatives. Ancillary probate is the process used to administer Florida property held by out-of-state residents and requires the appointment of a personal representative. Florida law is somewhat restrictive on who can serve in this role, and usually requires a close relative or Florida resident. The most common methods used to avoid the probate process include setting up a revocable trust, joint ownership with right of survivorship, and life estates. The bigger issue in estates with property held in multiple jurisdictions is that they must to go through probate in each state where the deceased’s property is located. Having several probate cases increases costs and complexity of closing an estate, so limiting the need for these proceedings is key to protecting assets.
Work with a Trust and Estates Attorney
Determining the proper estate plan for people who own property in more than one State is a complicated process that should be guided by an experienced trusts and estates lawyer. There are numerous tax and inheritance implications that can greatly affect the ultimate value of an estate. The Tampa law firm of Bubley & Bubley, P.A. can help you navigate how to best handle this situation. Contact us to schedule a consultation.