How to Handle Out-of-State Property in Your Estate Plan

Why Out-of-State Property Planning Matters

Owning real estate in more than one state can complicate your estate plan if not handled properly. Many individuals own vacation homes, rental properties, or inherited real estate in states other than their primary residence. While this is often a sign of financial growth and personal success, it can also lead to legal complexities after death.

The primary issue? Ancillary probate, a separate probate process required in the state where the out-of-state property is located. Ancillary probate is time-consuming, expensive, and can create unnecessary stress for your loved ones.

Proactively planning for out-of-state property avoids these headaches. In this guide, we’ll walk you through the steps to handle out-of-state real estate in your estate plan to protect your assets and provide peace of mind for your family.

Understanding Ancillary Probate

When you pass away, your estate typically goes through probate in the state where you reside. However, real estate must be probated in the state where it is located. This is called ancillary probate.

What Is Ancillary Probate?

Ancillary probate is a secondary probate proceeding that handles real estate or tangible assets located in a different state from where you lived when you died. For example, if you live in Pennsylvania but own a beach house in Florida, your executor would need to open probate in both Pennsylvania and Florida to transfer or sell the property.

Why Is Ancillary Probate a Problem?

Ancillary probate can cause:

• Higher legal fees

• Additional court costs

• Delays in asset distribution

• Increased stress for your heirs

• Exposure to state-specific tax laws

Avoiding ancillary probate is one of the smartest things you can do to simplify your estate.

Strategies to Handle Out-of-State Property in Your Estate Plan

There are several ways to plan for out-of-state property. Each method has pros and cons, and the best option depends on your situation.

Create a Revocable Living Trust

One of the most effective ways to avoid ancillary probate is by placing out-of-state property into a revocable living trust.

Benefits of a Revocable Living Trust

• Avoids probate in all states

• Maintains privacy (trusts are not public records)

• Provides clear instructions for asset distribution

• Simplifies management if you become incapacitated

You can deed your out-of-state property into your trust now, so ownership is transferred automatically upon death without going through probate.

How It Works

1. Establish a revocable living trust with your estate planning attorney.

2. Title your out-of-state property in the name of the trust.

3. Manage the property as the trustee during your lifetime.

4. Upon death, your successor trustee handles the transfer or sale of the property without court involvement.

Consider Joint Ownership with Rights of Survivorship

Some people add a co-owner to the deed with rights of survivorship, meaning the property automatically passes to the surviving owner upon death.

Pros

• Avoids probate

• Simple to set up

Cons

• May create gift tax issues

• Could expose the property to the co-owner’s debts or legal issues

• Limits your control over the property

This method may work for married couples but is usually not recommended for non-spouses due to legal and financial risks.

Use a Transfer on Death (TOD) Deed

Some states allow a transfer on death deed, also known as a beneficiary deed. This allows you to name a beneficiary who will automatically inherit the property upon your death.

States That Allow TOD Deeds (as of 2025)

• Arizona

• California

• Colorado

• Florida

• Indiana

• Kansas

• Missouri

• Nevada

• Ohio

• Oklahoma

• Texas

• Virginia

• Several others

Check with an attorney to confirm whether the state where your property is located allows TOD deeds.

Benefits of TOD Deeds

• Avoids probate

• Keeps you in full control during life

• Simple and inexpensive to set up

Form a Limited Liability Company (LLC)

Placing out-of-state property into an LLC can be a strategic option for rental properties or vacation homes.

Advantages

• Asset protection from lawsuits

• Avoids probate if the LLC is properly structured

• Provides business flexibility for multiple owners

How It Works

You create an LLC in the state where the property is located or in your home state (depending on the legal strategy). You transfer the property into the LLC and include the LLC membership interest in your estate plan—either in your trust or will.

Address State-Specific Tax Implications

Each state has unique tax laws that can affect how your out-of-state property is handled after death. Some states have:

• Inheritance taxes

• Estate taxes

• Property transfer fees

• Capital gains tax implications for heirs

Proper estate planning can help minimize taxes and avoid costly surprises for your beneficiaries.

Work with an Experienced Estate Planning Attorney

Handling out-of-state property in your estate plan is not a do-it-yourself project. Each state has its own laws about:

• Probate

• Trusts

• Property deeds

• Taxes

• Business entities

Working with an experienced estate planning attorney ensures that your plan is legally sound and that your out-of-state property is protected.

Steps to Take Now

If you own property in another state, follow these steps:

1. Review Your Current Estate Plan

Does your will, trust, or estate plan currently address your out-of-state property? If not, this is the time to update it.

2. Determine the Title of Your Property

Check how your property is currently titled. Is it in your name alone? Jointly owned? Held in an LLC or trust?

3. Discuss Your Goals

Consider:

• Who do you want to inherit the property?

• Do you want the property sold after your passing?

• Are there tax considerations?

• Do you want to avoid probate?

4. Choose the Right Strategy

Work with your estate attorney to determine whether a trust, LLC, joint ownership, or TOD deed is best for your situation.

5. Update Your Documents

Make sure your estate planning documents are consistent and legally valid in all relevant states.

Call Ament Law Group for Estate Planning Help

Don’t leave your out-of-state property vulnerable to legal complications or unnecessary probate.

At Ament Law Group, PC, we help clients create comprehensive estate plans that protect all their assets—including real estate in multiple states. Whether you need a trust, TOD deed, or guidance on the best strategy for your family, we’re here to help.

Call Ament Law Group today at (724) 733-3500 to schedule your consultation. Let’s secure your legacy—no matter where your property is located.