Understanding the intricacies of probate is a challenging task, especially when there are properties in multiple states – the good news is that there is a special type of probate that deals directly with this scenario, called ancillary probate.
Ancillary probate is an additional step to the regular probate process that often occurs when a decedent owns property in states outside of their primary residence.
When your family is facing this scenario, understanding the intricacies and requirements of ancillary probate is crucial to avoid delays and complications.
Don’t worry if the idea of grasping the concept seems overwhelming because this article is here to walk you through it.
We’re going to take a journey through 10 important aspects of ancillary probate, from what it is to how it works to potential challenges.
Having a strong grasp of the concept will help you navigate the ancillary probate process with confidence and enjoy a smooth and efficient experience.
1. What is Ancillary Probate?
Ancillary probate refers to an extra step in the regular probate proceedings that may be required when a decedent owns property outside of their primary state.
So, let’s first take a look at what the regular probate process entails.
When a person passes away, the decedent’s properties are typically distributed under the supervision of the court.
The court validates the wishes of the decedent’s will and assigns a person to be the executor who becomes responsible for handling debts and distributing properties and assets to beneficiaries.
If an executor is not named in the will, the court usually selects a close family member (in the case that there are no eligible family members, the court will appoint an attorney or professional estate administrator).
Each state has its own laws and regulations regarding the transfer of properties, which is when ancillary probate comes into the picture.
Ancillary probate may be an additional step, complicating the process, but it exists to help you avoid issues and disputes in the transfer process.
So, let’s take a look at an example of ancillary probate to get a better understanding of it.
2. What is an Example of an Ancillary Probate?
Let’s say a woman named Jane, whose primary residence is Colorado, passes away.
In her will, she clearly states the distribution of her properties.
She had a home in Colorado and a beach condo in California.
In order to officially distribute her homes, it requires two separate probate proceedings for each state; however, they will happen simultaneously.
The Colorado home, her primary residence, will go through a regular probate proceeding in the state of Colorado.
The state’s court will ensure that the distribution of the property is done properly by the executor and follows Colorado’s laws.
The California home, her non-primary residence, will go through an ancillary probate proceeding in the state of California.
The state’s court will ensure that the distribution of the property is done properly by the executor and follows California’s laws.
The physical presence of the executor in the state of the property is not always required.
However, there may be certain instances, such as a court hearing, that would require their presence.
It is also likely that they will need to work with a local attorney for each property in each state.
3. What Documents Are Required for Ancillary Probate?
An ancillary probate proceeding requires the collection of several documents, but which ones do you actually need?
There are a handful of documents you can expect to be required, so let’s check those out.
Documents that may be required for ancillary probate:
Certified death certificate: A certified death certificate (or copy of one) will be required to verify the passing and initiate the ancillary probate proceeding.
Last will and testament: If there is a valid will, it will be required to verify the beneficiaries of the property.
The proceeding could continue if the decedent never created a will.
Letter of Administration: This is a court-issued document that gives an individual–the executor–permission to manage the properties and access financial accounts.
Petition to Probate: The Petition to Probate is a formal request asking the court to appoint an executor to act on behalf of the estate.
The court will either appoint the person specified in the will to be the executor or appoint a close family member or attorney if it was not specified.
Inventory of the properties: A list of assets the decedent owned will be required.
Only properties that are located in the state where the ancillary probate is being processed are needed.
Copy of deeds (proof of ownership): Providing proof that the decedent owned the properties involved in the ancillary probate will be required.
A copy of the deeds will suffice.
Copy of tax documents: Tax documents, such as federal and state tax returns, estate tax returns, and property tax documents, are typically required in ancillary probate.
*Remember, each state has its own laws and requirements.
Working with a local attorney will ensure you gather the correct documents and avoid delays and complications.
4. What Assets Are Subject to Ancillary Probate?
Most assets that were owned by the decedent outside the state of their primary residence are subject to ancillary probate.
Here is a list of potential assets that fall under ancillary probate:
Stocks, bonds, mutual funds, etc.
5. Can You Avoid Ancillary Probate Altogether?
In some cases, ancillary probate can be avoided if assets are transferred through certain mechanisms or if the total value of the estate if below a certain amount.
However, if your goal is to navigate around it, steps typically have to be taken before the owner of the property passes away.
Here are some mechanisms that allow the transfer of property without an ancillary probate proceeding:
Placing assets in a revocable living trust enables the transfer of property before the decedent passes away.
However, the owner (the trustee) remains in control of the property.
Once the trustee passes, the assets will fall under the control of the beneficiaries without an ancillary probate proceeding.
Properties that are held in joint ownership can avoid ancillary probate.
For example, if a married couple owns a property together, and someone passes away, the asset will automatically be distributed to the surviving joint owner.
No ancillary probate will be required.
Some states offer a transfer-on-death deed that becomes effective when the owner of a property passes.
The deed specifies who will gain control of the property after the owner’s death.
This type of deed is different than joint ownership because the designated recipient has no ownership of the property until the passing.
Transfer-on-death deeds can be revoked at any time while the owner is still alive.
People have the option of gifting property while they are still alive to avoid ancillary probate after their death.
However, once assets are gifted, the original owners relinquish their control over them.
Gifting assets should only be utilized if the owner has complete trust in the person receiving them.
Whoever receives the assets will have full control over what happens to the property, including whether it’s sold or transferred.
Small Estate Affidavit (Personal Property)
Sometimes a small estate affidavit can be used to avoid ancillary probate, but it can’t be used to transfer real estate.
If a non-real estate asset is valued under a certain limit, for example, $100,000, then a small estate affidavit can be utilized to transfer the asset without going through an ancillary probate proceeding.
Not every state offers this option, so speak with a local attorney.
6. How Long Does Ancillary Probate Take to Complete?
How long ancillary probate takes to complete depends on several factors.
Some situations, such as the number of assets, disputes, and the schedule of the probate court, are some of the biggest determinants of the timeline of the proceeding.
As a rule of thumb, ancillary probate proceedings are shorter than regular probate proceedings.
Expect the ancillary probate process to take between two and six months.
If you’re only dealing with one small estate, then it’s possible the proceeding can move even quicker.
To expedite the process, work with an attorney who specializes in ancillary probate in the state where the property is located.
The attorney will ensure that all the necessary paperwork is collected and that each step is taken properly.
If the owner of the property is still alive, they can take action, such as creating a will that clearly specifies the beneficiaries and executors, to help smoothen the transfer process after their passing.
7. What are the Costs?
Ancillary probate comes with a few costs that are important to be prepared for.
The cost of these fees is dependent on the state where the property is located and the rates charged by attorneys or other legal professionals.
Here are some of the fees you should expect during ancillary probate:
Attorney fees: Using an attorney during ancillary probate is very beneficial to ensure a smooth proceeding; however, attorney fees can be quite high.
Before you hire an attorney, request a clear breakdown of the price and payment structure.
An attorney who is unwilling to provide that information should be avoided.
Court fees: Courts charge filing fees, which are typically a few hundred dollars.
The fees are sometimes dependent on the value of the assets that are subject to ancillary probate.
Ask a local attorney what court fees you can expect to pay.
Appraisal fees: Some ancillary probate proceedings will require estates to be appraised, which results in appraisal fees.
The price of these fees depends on the size and complexity of the property.
Expect to pay a few hundred dollars for a standard, single-family home.
Larger estates will have a higher price tag.
Accounting fees: It may be necessary to work with an account to gather financial and tax information.
The price depends on the rates charged by the accountant, so request quotes from various professionals.
8. What are the Steps Involved?
Although everyone’s situation is unique, the steps involved in ancillary probate stay about the same.
Some of these steps may be quicker for estates that are smaller and less complicated and longer for estates that are more complex.
Here are the typical steps involved in ancillary probate:
Identify assets and determine if ancillary probate is needed.
Hire an attorney that specializes in ancillary probate.
Gather the necessary documents for the proceeding. The attorney will assist in this process.
File a Petition to Probate with the court in the state where the property is located.
The court will then appoint the executor specified in the will.
Provide a detailed list of assets subject to ancillary probate.
Settle any outstanding debts or unpaid taxes.
Appraise the out-of-state assets.
Collect necessary financial and tax records.
Distribute properties according to the instructions in the will.
Once all documents have been collected and the properties have been distributed, the court will close the ancillary probate case.
Record the final ancillary probate documents with the local clerk.
9. Can Ancillary Probate Be Contested Like Regular Probate?
Just like regular probate, ancillary probate can be contested.
Certain circumstances may give those who have a legitimate interest in the estate reason to believe there are issues relating to the will, legal documents, and distribution of the assets.
The process of contesting ancillary probate can be quite difficult and time-consuming, but it’s important to follow through with it if there are suspected issues.
Here are the main reasons for contesting ancillary probate:
Fraud: Documents or wills related to the ancillary probate proceeding that are suspected to be fraudulent could result in a contest.
Improper pressure: If someone pressured or influenced the decedent to make certain changes to how the properties were distributed, the probate could be challenged.
Lack of mental capacity at the time of will creation: If there is reason to believe the decedent was mentally incapacitated when the will was created, its validity can be challenged.
Improper execution: If the executor fails to follow ancillary probate requirements, values assets incorrectly, or fails to comply with the laws of the state, it could lead to parties contesting the probate.
Additionally, beneficiaries and other interested parties can contest the probate if they believe assets were improperly distributed.
Unpaid debts: Creditors can challenge ancillary probate if there are unpaid debts.
10. Can a Will Drafted in One State Cover Assets in Another State?
In general, a will that was properly executed in one state will cover assets in another state.
However, out-of-state assets will still require ancillary probate unless they were put in a living trust, gifted before death, or jointly owned.
When creating a will, it would be wise to work with an attorney to ensure it meets the legal requirements of the states where assets are located.
Ancillary probate is an important step in the legal transfer of a decedent’s out-of-state properties to beneficiaries.
Although the process may seem complicated, working with an attorney where the property is located will be the easiest way to ensure you meet all the requirements.
As long as all the documents are in order, debts and taxes are paid, an appraisal of the property is done, and a valid will is provided, an ancillary probate proceeding should be straightforward.
So, if you have any questions, speak with a legal professional to learn about ancillary probate in the locations that concern you.
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Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.