If you own real property or certain types of tangible personal property outside of Texas, your loved ones could be in for an added complication when it comes to settling your estate. In this situation, not only is any Texas property titled in your name subject to probate here at home, but certain out-of-state property will have to go through a probate process – called Ancillary Probate – in the state where it’s located.
If you plan ahead, there are ways to avoid Ancillary Probate. Here are a few methods:
- Joint Tenancy: If your co-own your property with a spouse or another person, and it’s titled as Joint Tenants With Right of Survivorship, then in the event of your death, the property will pass to your surviving co-owner. There are a few problems with Joint Tenancy as a method for avoiding Ancillary Probate, however. First, it’s a temporary fix. If your spouse is your co-owner, Ancillary Probate will be avoided when you pass away, but at your spouse’s death, absent additional estate planning, the property will be subject to the additional probate proceeding. Second, if your co-owner is not your spouse, there’s a laundry list of potential tax and financial consequences, especially if you add a co-owner after you purchase real estate.
- Business Entity: You can put the property in the name of a business entity, like a corporation or a limited liability company, formed in your home state and owned and controlled by you. While this will avoid Ancillary Probate, it may not avoid probate in your state of residence.
- Living Trust: You might choose to fund the property into your Revocable Living Trust. Property that is owned by your Living Trust when you pass away avoids probate altogether. Your successor Trustee simply follows the terms of your Trust (as well as the requirements imposed by law) in distributing your property to the appropriate beneficiaries.
These are not the only methods for avoiding Ancillary Probate. Your estate planning attorney can explain all of your options in this area, as well as the advantages and disadvantages of each option as it applies to your situation.
Stephen A. Mendel, Estate Planning Attorney
Mr. Stephen Mendel is an attorney who focuses a substantial part of his practice on estate planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal services tailored to each client’s specific needs and goals.
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