Handling Out-of-State Property: Florida Estate Planning for Snowbirds and Beyond
Florida’s sunny climate attracts people from across the country, many of whom split their time between multiple states. Whether you own a second home up north, a vacation condo in another region, or business property outside Florida, multi-state assets complicate estate planning. Ensuring a smooth transfer of out-of-state property requires specific tools and a clear strategy.
The Concept of Ancillary Probate
When a Florida resident passes away owning real property in another state, that property may trigger ancillary probate in the other jurisdiction. This means two probate processes:
Primary Probate in Florida for in-state assets.
Ancillary Probate in the state where the additional real property is located.
Ancillary proceedings can be time-consuming and add to the legal fees, paperwork, and stress of your family’s experience.
Strategies to Avoid or Streamline Multiple Probates
Use a Revocable Living Trust
Placing out-of-state real estate into a Florida revocable trust can help bypass probate in the other state. The trust, rather than you personally, holds title to the property. Upon the successor trustee's death, the property can be transferred or sold without the need for a separate court case.
Establish an LLC or Business Entity
Some individuals prefer holding real property through an LLC. If properly structured, transferring or selling the LLC’s ownership interest may avoid the need for ancillary probate in the other state. Consult an attorney to ensure compliance with both Florida law and the other state’s laws.
Joint Ownership with Right of Survivorship
In certain cases, adding a co-owner with rights of survivorship can allow property to pass directly to the surviving owner. However, this method can raise gift tax considerations or complicate overall estate planning, so weigh the pros and cons with professional advice.
Tax Implications
Owning property in multiple jurisdictions can lead to additional tax concerns:
State Inheritance Taxes: Some states have inheritance or estate taxes that Florida does not. If your out-of-state real estate is subject to these rules, you’ll want to plan accordingly.
Capital Gains: Selling property in another state may trigger local taxes, depending on how long you’ve owned the property and its value growth.
Federal Estate Taxes: While Florida doesn’t levy its own estate tax, the federal estate tax might apply to larger estates if they exceed federal exemption thresholds.
Coordinating Attorneys in Multiple Jurisdictions
If you retain property in another state, it may be prudent to involve an attorney from that region when drafting or updating your Florida estate plan. Florida counsel can coordinate with out-of-state counsel to ensure all legal requirements align, from deed transfers to disclaimers of interest.
Avoiding Common Pitfalls
Improper Deeds: If you move a property into a trust or LLC, ensure the deed is correctly executed and recorded. Missing or incorrect filings lead to confusion down the road.
Inconsistent Beneficiary Designations: If your estate plan states one thing but joint ownership or transfer-on-death deeds indicate something different, the latter may take precedence. Confirm consistency across all documents.
Failure to Revisit: Laws change over time, particularly in areas such as trusts, LLC governance, and tax exemptions. Periodically review your multi-state plan.
Conclusion
Owning out-of-state property requires a comprehensive approach to estate planning. Florida’s probate rules won’t spare your heirs the hassle of ancillary proceedings if you haven’t implemented proactive solutions such as trusts or LLCs. By properly titling real estate, staying mindful of state-specific tax implications, and coordinating with legal expertise, you can help loved ones avoid navigating multiple court systems during a time of grief and distress. Consult a qualified attorney to ensure your multi-state assets pass efficiently, reflecting your true intentions.
Disclaimer: This information is for general educational purposes only and does not constitute legal advice. For individualized recommendations, please consult a licensed attorney familiar with Florida law and the laws of any other relevant jurisdictions. No aspect of this material has been approved by the Supreme Court of Florida.
