Owning Property In A State Other Than The State You Call Home

Your dream – to own a home in the mountains or a home at the shore.  Unless you live in New Jersey and have a home at the shore or live in Pennsylvania and have a home in the mountains, your estate could be subject to estate administration in the state where your second home is located.  Many people from Pennsylvania and New York enjoy a home at the Jersey shore.  Many people from New Jersey enjoy a home in the Pennsylvania Mountains. 

Also, in today’s world of online banking, where the financial institution does not have a brick and mortar location in your state, the account you have could be subject to what is called ancillary administration – administration in a state other than that of your primary residence. 

Ancillary administration is required to show that there is an estate administration in the home state of residence. It can be as simple as filing a copy of a death certificate when husband and wife own real estate together all the way to the extent of having to go through a long-drawn out process requiring court appearances. 

For example, an online financial institution offered a great interest rate on an account – better than could be found elsewhere.  The owner dies and the estate is administered in New Jersey with the filing of an inheritance tax return and the issuance of a waiver that all inheritance taxes are paid.  The executor presents the waiver to the financial institution located in California.  Rather than getting the proceeds via a signed letter of the executor requesting the account be closed, the executor must go through the ancillary process in California that involves filing of documents referencing assets of the decedent who was a resident of New Jersey, being recognized as the executor of the estate, advertising the estate administration in California newspapers, and being present for a couple of court hearings – fortunately via telephone.  So, in the end, was that great interest rate that great?

Know what could be required if you own assets in another state.  The above scenario could be experienced, the need to file additional documents could be experienced, there could be inheritance tax due (such as if a New Jersey resident owned real estate in Pennsylvania which passes to children – no New Jersey inheritance tax, but there would be inheritance tax on the real estate in Pennsylvania). 

I am not advising that you not own assets in other states, but just be aware.  Speaking with your estate planning attorney may open up some ideas as to how ancillary administration may be able to be avoided, but if you don’t ask, you will never know what options are available to you. 


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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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