How Does New York Law Treat Out-of-State Properties in Estate Planning?

Estate Planning

How Does Out-of-State Real Property Differ From Other Assets in an Estate Plan?

Regardless of where they are located, the ownership of most assets within your estate, including bank accounts, personal belongings, vehicles, and more, can be transferred per the terms of your New York will. Typically, all that is required to dispose of these assets is completing the state’s probate process. However, out-of-state real estate, whether domestic or foreign, is usually considered to be under the jurisdiction of the country or state where it is located. If you possess property out of the state, consulting with an experienced New York estate planning lawyer is recommended to ensure your property is distributed how you intend.

Can a New York Will Be Used to Control the Disposition of Out-of-State or International Properties?

If you are domiciled in New York and own real property anywhere outside the state, that property is likely to be subject to the laws of the location where it is situated.

Generally, a New York will that conforms to the requirements set by the state will be considered valid in every state. However, even though you may have a valid New York will, your heirs will generally need to file ancillary probate proceedings in the jurisdiction where the property is located, in addition to New York probate, to dispose of the property. This process can lead to extra time and expense for your heirs.

International properties can be particularly challenging to handle using a New York State will. Some countries and US states are signatories to the Uniform International Wills Act (UIWA), which provides a strict framework for drafting international wills that all participating localities will recognize. Due to significant differences between the estate laws of New York and other locales, it’s possible your will may not be accepted in the location. In that case, your property would be subject to that jurisdiction’s intestacy proceedings. In that case, a single will would not be practical for individuals with foreign properties.

Other countries may have very different laws regarding the allowable distribution of property, and wills that do not meet these standards could be ruled invalid. For example, certain countries and territories, including Puerto Rico and Japan, do not allow the testator to disinherit specific relatives. Even some US states, like Louisiana, have similar laws restricting the ability of the testator to leave certain family members out of their will. Understanding the rules governing wills in the locality of your property is vital to ensuring your estate is distributed in the way you desire.

How Can Your Estate Plan Address Jurisdictional Issues That May Arise for Your Properties?

Individuals who own multiple properties outside New York State must take a careful approach to estate planning to ensure their beneficiaries will inherit in the way they intend. Building a portfolio of diverse assets, including real estate, can benefit your family for many generations to come. However, you will want to make certain your estate plan is optimized to handle the distribution of these assets with the least expense and delay for your loved ones. Your estate planning attorney can assess your needs and goals to help you find the right strategy for your unique situation.

Multiple Wills

Creating different wills to handle the real estate in each jurisdiction is one way to ensure the correct distribution of your property. However, this method does entail some complexity. You must ensure that each will does not revoke the others, or your heirs could face a legal nightmare during probate. You will also likely need to consult with multiple lawyers with in-depth knowledge of each state or country’s estate laws to make sure your will meets all legal requirements for the location. Your legal representatives should be informed of the presence of the other wills and where they are located to make the process more streamlined in the event of your passing.

Trusts

By placing out-of-state property into a trust, you can effectively remove it from the purview of the jurisdiction where it is located and ensure it is disposed of in the way you wish. Trusts can also be utilized for tax planning purposes, which may be vital if you have high-value properties in several locations that could be subject to different estate and tax laws. However, the trust must be created correctly with the assistance of a knowledgeable lawyer to maximize its effectiveness and avoid any potential pitfalls. Trusts have upfront and maintenance costs, but in many cases, they are worthwhile because your heirs can avoid the expense of ancillary probate for your out-of-state property.

How Do You Avoid Confusion Surrounding Your Domicile?

Another estate planning issue when you have out-of-state properties is the question of your domicile. The location where an individual is domiciled before their death determines the jurisdiction and laws that will govern the distribution of the movable assets in the estate. A domicile is defined in New York state legislation SCPA § 103 as “A fixed, permanent and principal home to which a person, wherever temporarily located, always intends to return.” Determining which location is their domicile may become complex for individuals with multiple residences in several states or countries. 

For example, a person may have lived the majority of their lifetime in New York, but during the last few years of their life, they spent most of their time in a second residence in Arizona. Determining their domicile can become a tricky legal matter without a clear indication of the decedent’s intent to return to a particular location. However, by working closely with a New York estate planning lawyer, you can take steps to clarify the situation as part of your planning process and avoid unnecessary surprises and hassle for your executor and beneficiaries.

How Can Our Firm Assist You?

Whether your out-of-state property is a vacation home, rental property, business, or other real estate, it represents a significant asset for your heirs. Thoughtfully preparing for the disposition of this property through your estate plan can ensure your family receives the full benefit of it with minimal stress and legal challenges. A skilled lawyer from Davidov Law Group can evaluate your situation and help you create a customized plan that supports your goals. Contact us at 516-253-1366 to begin the planning process today!

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