When accounts or property are in other states at the time of death, many times those portions of the estate need to go through an ancillary probate, or an additional probate. Learn how to avoid that process through estate planning.
What is an ancillary probate? When a person dies, their state of residence has jurisdiction over their estate. This is the state where a probate is usually filed. The state of residence is also normally where the decedent’s property is located. However, sometimes a decedent owned property in another state. When this happens, an ancillary probate is often needed to handle the out of state property. It is a probate proceeding that is ancillary to and designed to assist the main probate. Ancillary probates are common in Arizona because thousands of our winter visitors have purchased homes here but continue to reside in their home states. Similarly, many of our Clients probating an estate here in Arizona often need our help to locate and hire an out of state attorney to transfer property the decedent owned in that state. Obviously, probating an estate in two or more states adds additional cost and complexity to the handling an estate.
How can an ancillary probate be avoided? An ancillary probate can be avoided by using the same strategies employed to avoid any probate. Assets need to be held in such a way that they do not need to go through a probate. They become non-probate assets. Some of the common ways to accomplish this are:
- Use payable on death (POD) or transfer on death (TOD) accounts. If your financial institution accounts are set up this way, no probate is needed to transfer the accounts to the person or persons you have named as transferee.
- For real property, use of a beneficiary deed can eliminate the need for a probate as the beneficiary named in the deed takes automatically upon the Grantor’s death without the need for any court proceeding.
- Titling of accounts or real property in Joint Tenancy with Right of Survivorship between two or more persons can also avoid a probate. However, this strategy should be used sparingly as it can have unintended consequences. Creating a joint tenancy to avoid probate involves transferring a present ownership interest in property to another person. This means that the asset becomes vulnerable to any creditors or ex-spouses of the other person. Use of a joint tenancy with right of survivorship by spouses in a second marriage may result in the property going 100% to the children of the spouse that lives the longest—a result that may not be desired.
- The execution and proper funding of a Revocable Living Trust. A revocable living trust is one of the most popular and most flexible estate planning tools. Where out of state property is owned by a trust, no probate is needed to transfer it.
Use of procedures set forth in ARS 14-4201, et seq can also avoid an Ancillary Probate. Where assets exist that may require an Ancillary administration, ARS §14-4204 and ARS §14-4205 can sometimes solve the problem. ARS §14-4202 allows the filing of certified copies of a Foreign Personal Representative’s Letters of Appointment along with copies of any bond in the Superior Court of any Arizona county where the decedent’s property is located. If this is done, ARS §14-4205 provides that the Foreign Personal Representative has many of the same powers as a local personal representative when dealing with estate property.
The lawyers at Platt and Westby, P.C. have been practicing in the area of Probate and Estate Administration for over 40 years. Contact any of our Probate lawyers at 602-277-4441 or use the e-mail contact utility on our website at www.plattwestby.com to schedule a no-fee initial conference concerning any Probate or Estate matter. We will answer your questions and suggest potential solutions.
Platt and Westby, P.C. has offices in Phoenix, Arrowhead, Avondale, Scottsdale and Gilbert, Arizona.