How to Plan for Real Estate Owned in More Than One State

Real estate is governed by the law of the state where it sits. If you die owning a condominium in Florida, a house in Virginia, and an apartment in New York in your own name, your executor will open a probate estate in your home state and then a separate ancillary proceeding in each of the others, with its own court, its own local counsel, and its own timeline. Planning for real estate in multiple states is mostly about getting the property out of your individual name before death so that no second or third court is needed. The same logic, with more complications, applies to property abroad.

Why real estate in multiple states means multiple probates

A probate court’s authority stops at the state line. Letters issued by a Virginia circuit court clerk give your executor no power to sign a deed in Florida. The executor must petition the Florida court, usually by filing authenticated copies of the home-state proceedings, obtain ancillary letters, publish notice to creditors there, and then transfer or sell the property under that court’s supervision. Each ancillary estate adds filing fees, a local attorney, and a delay that holds up the sale or transfer of that property. For a family with a vacation home this is an annoyance; for an estate with rental property in three states it is a serious drain. Our estate planning and asset protection practice treats any out-of-state deed as a planning problem to solve now rather than a probate problem for later.

Tool one: deed the property to a revocable trust

The standard solution is a revocable living trust that holds title to every parcel. At death, the successor trustee sells or distributes each property under the trust’s terms, with no court involvement in any state. The trust must actually be funded: a new deed for each property, recorded in the county where it sits, following that state’s recording rules. We coordinate with local counsel where a state requires specific deed language or a trust certification. Points to check before transferring include lender consent (federal law generally prevents a lender from calling a residential mortgage because the borrower transferred the home to a revocable trust in which they remain a beneficiary, but confirm it), title insurance continuation, property tax exemptions tied to owner-occupancy, and transfer taxes, which some jurisdictions impose even on a transfer to your own trust. Our post comparing living trusts with wills covers the broader case for the trust.

Tool two: hold investment property in an LLC

Rental and commercial property is often better held in a limited liability company for liability reasons. The estate planning benefit is a side effect: an LLC membership interest is personal property governed by the law of your domicile, not real property governed by the law of the state where the land sits, so it passes without ancillary probate. The LLC interest can in turn be held by your trust. The trade is annual state filings, possible franchise or entity taxes, and the need to run the company properly. Transfer taxes and reassessment risks apply here too, and some lenders treat a transfer to an LLC differently from a transfer to a revocable trust.

Tool three: joint ownership with survivorship

Titling property jointly with right of survivorship, or as tenants by the entirety with a spouse, passes it to the surviving owner by operation of law without probate anywhere. It is simple and effective between spouses. Adding a child or another person as joint owner to avoid probate is usually a mistake: it is a completed gift of a share of the property, exposes the property to the co-owner’s creditors and divorce, requires the co-owner’s signature to sell or refinance, and only defers the problem to the survivor’s death.

Tool four: transfer-on-death deeds

A transfer-on-death deed names a beneficiary who receives the property at your death, while you keep full ownership and control during life. Virginia and the District of Columbia have allowed them for years, and New York adopted a version more recently, though as of this writing the procedures and practical acceptance still vary. Not every state recognizes them, so the tool depends on where each property sits. A TOD deed avoids probate for that parcel but does not provide incapacity management or the distribution terms a trust can, and a beneficiary who predeceases you or is a minor creates the same problems described in our post on beneficiary designations and your will.

Property outside the United States

Property abroad raises three further issues. First, the law of the country where the property sits governs how it passes, and many civil-law countries apply forced heirship rules that reserve a share for children or a spouse regardless of any will. Second, that country may not recognize a U.S. trust at all, or may tax it unfavorably, so a trust that works for the Virginia house may be the wrong vehicle for a flat in Istanbul. Third, a U.S. will may need to be proved again abroad, translated, and apostilled, which is slow. The usual answer is a separate will for the foreign property, drafted by counsel in that country, with each will written so that it does not revoke the other. Our post on estate planning for non-citizens covers the tax side, including the fact that a U.S. domiciliary’s worldwide property, including the foreign real estate, counts toward the federal estate tax.

Putting it together

Make an inventory of every parcel you own, in every state and country, with how it is titled and whether there is a mortgage. For each one, choose the tool: trust, LLC, survivorship title, or TOD deed. Then execute the deeds and recordings, which is where most plans stall. A trust with no deeds behind it, or an LLC that was formed but never received the property, leaves the ancillary probate exactly where it was. The firm’s real estate practice handles the transactional side of these transfers, and our trusts and estates group keeps the plan in line as properties are bought and sold. Buyers who are not U.S. citizens have an additional layer to consider, covered in our post on purchasing a home without citizenship.

If you own property in more than one state or country, a consultation with Capitol Law Partners can map each parcel to the right tool and get the transfers recorded. Schedule a consultation.

This article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by this communication.

Attorney Sena Sahin. Clear advice for individuals, families, and business owners.

Need help with this topic? See our estate and asset transfer planning page or schedule a consultation.