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by Joseph A. Bollhofer, Esq. 

             Many people know that probate is the process of having a deceased person’s property administered by a representative appointed by the probate court so that it may be transferred under a last will and testament, if there is one, or to the heirs of the deceased person.  

            When your domicile (primary residence) is in New York State, and you own real property in another state, probate often will be required in that other state in order to transfer the real property.  That is because real property is always governed by the laws of the state in which it is located, not the laws of the state where the owner lives.  

            This second probate process is called “ancillary probate”.  For the executor or the administrator of the estate, and the beneficiaries of the estate, ancillary probate results in additional expense and delay.  Most likely, an attorney is needed in the second state in order to handle this probate.

            State laws vary greatly on this subject.  Some states permit a “transfer on death” (TOD) deed to transfer ownership of real property, thus avoiding probate.  This deed of course must be signed while the owner is still alive.  It takes effect upon death.  However, the laws even among those states have varying requirements.  For example, in California real property owned by more than one person can only be transferred by a TOD deed if each owner creates a separate deed.   

            Still other states permit title to be passed by “heirship” if there is no last will and testament.  Under this process, affidavits of heirship are recorded as proof of the right to ownership if there is no probate.  A deed from those heirs will pass good title without having to go through probate.  Some states, however, such as Florida, require probate of the estate in order to transfer clear title.  

            Even if a state’s law does not require probate, a purchaser’s title company might not be willing to insure clear title without a probate court decree and appointment of an administrator to sign the deed for the estate. 

            The uncertainty, delay and expense of these processes can be avoided by having title to real property held in one of three ways:

1.      Creating a deed where persons own the real property as “Joint Tenants with right of survivorship”.  This means that if one of those persons dies, the other person automatically becomes the full owner without having to do anything else.

2.      Transferring ownership of the real property by deed to a trustee of a revocable trust or irrevocable trust.

3.      Transferring a remainder interest by deed and retaining a “life estate”, which is the right to live in the premises for the rest of your life.  Upon your death, the remainder owners automatically become full owners.

          Under any of these three circumstances, no court involvement is necessary in order to transfer ownership of the property in those states that do not permit a TOD deed, such as New York. These methods are preferred as a means of transferring ownership quickly and inexpensively after death.

           However, these methods also create other potential concerns, such as capital gains tax issues, Medicaid eligibility issues, potential lack of control to sell and/or mortgage the premises, and other concerns, all of which are beyond the scope of this article.

            If you do own real property outside of New York, you should consider consulting with an attorney to determine whether that real property will avoid an ancillary probate process after your death.  If it is important to you to avoid ancillary probate, you should explore alternatives that might better satisfy your objectives.

Copyright 2016 Joseph A. Bollhofer, Esq.

Editor’s Note:

Joseph A. Bollhofer, Esq., is an attorney who practices law in the areas of elder law, Medicaid, estate and business planning and administration, and real estate. He is a member of the National Academy of Elder Law Attorneys, and of the Elder Law, Real Property, and Surrogate’s Court Committees of the Suffolk County Bar Association and of the Elder Law and Real Property Law Sections of the New York State Bar Association. He has been serving area residents since 1985 and is admitted to practice law in New York and New Jersey. His office is located at 291 Lake Ave., St. James, NY. (584-0100). For reprints of this article and others concerning Medicaid, Elder Law and Estate Planning, send a request to info@bollhoferlaw.com or visit www.bollhoferlaw.com.