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Article VIII "Owning Real Estate in Multiple States"

If you are a New York domiciliary and own real property outside of New York State, you should consider changing the method of ownership of the out-of-state real property to avoid ancillary probate. Ancillary probate adds costs and time to the probate process. Ancillary probate outside of New York requires you first to probate your Will in New York. Only after the New York Surrogate's Court grants probate can you file for ancillary probate in the out-of-state court. Your executor or personal representative will need to hire a probate lawyer in each state, file certified copies of the New York probate proceeding in the other state's court and comply with other administrative requirements. Ancillary probate in Florida is particularly time consuming because Florida probate court, unlike New York Surrogate's Court, requires notice to creditors and multiple reports after filing the ancillary probate petition.

One way to avoid probate in each state is to transfer title to your real property to a revocable trust, frequently referred to as a living trust or inter vivos trust. Since title is owned by the revocable trust and not you, there is no need to file for ancillary probate. The successor trustee of the revocable trust can transfer title without court order upon your demise. A revocable trust can be modified or eliminated at any point. There are no tax implications when you create a revocable trust. You are still treated as the owner of the real property for income tax purposes and will report the income and deductions in connection therewith on your personal income tax return. If you are also a trustee or co-trustee, the revocable trust does not have to obtain a tax identification number or file a tax return during your lifetime.

Another method of avoiding the cost and delays associated with ancillary probate of out-of-state real property is to transfer ownership to a limited liability company (“"LLC"”). The LLC can transfer title without the necessity of probate since the LLC, and not you, is in title. An LLC also insulates you from any personal liability in connection with the out of state property. A member of an LLC cannot be held personally liable unless he has signed a personal guarantee.

If you have already become a resident in Florida, but have retained ownership of a second residence in New York, you should then consider transferring title to your New York home to a revocable trust or LLC to avoid probate in New York. If you own real property out-of-state, please call us to determine if the transfer of title to a revocable trust or an LLC makes sense for you.

The purpose of this website is to familiarize its readers with the subject matter. The author is not rendering legal, accounting or other professional advice or opinions on specific facts and assumes no liability with the use of this information. The law is very complex and constantly changing. No one should attempt to apply or interpret any law without the help of a trained expert. The author is licensed to practice law only in New York State and any law referred to on this site is the law as it applies in the State of New York.