This week my family and I moved back to my hometown of
Naperville, Illinois, after seven years in the Air Force. During that time, I frequently drafted estate
plans for military members with property in multiple states. Today’s post will discuss what happens when
people die with property outside their state of residence. I will use my family’s story as an example:
As an Air Force officer, I lived in three US jurisdictions: North Dakota, Ohio, and Guam (a US territory
in the Western Pacific – see picture above).
In 2010, we purchased a home in Guam, while maintaining Illinois
residency, an arrangement that is common in the military. We loved owning our little slice of paradise
in the tropics. But what would have
happened if we had died with some property in Illinois and a house in Guam?
In general, for personal property (bank accounts,
investments, personal belongings, etc), a will is probated in the state of
residence. In our case, if we died with
an Illinois will, an Illinois court would oversee the disposition of our
personal property. However, when it
comes to real property, generally the jurisdiction where the real property is
located handles the probate process.
If we died with just an Illinois will, and no other estate
plan in place, our survivors would likely have to go to court in two separate
jurisdictions: Guam, and Illinois, to
probate the will. The real estate would
be probated in Guam, and the rest of the estate in Illinois. This could greatly increase the legal fees to
close our estate. Additionally, it might
take a year or more to complete the process.
However, like many couples, my wife and I held title to our
Guam house as joint tenants with right of survivorship. If just one of us died, the other would
automatically take ownership of the whole property. There would be no need to probate our will in
Guam, because joint tenancy bypasses entirely the probate process. Our remaining personal property could be
handled through our Illinois will in Illinois probate court.
Unfortunately, joint tenancy is not foolproof. If my wife and I both died, the joint tenancy
would extinguish. By default, our house
would then have to be probated in Guam. This
would put us back in the unfavorable situation of multiple-state probate.
However, there is a fix:
A living trust allows property in multiple states (even real property) to
pass entirely outside of the probate court process. The mechanism is relatively
straightforward. First, we would put all
of our property (real and personal) into a living trust, where we remained the
trustees and beneficiaries during our lives.
We would name a successor trustee in the document to take over the role
of managing our property after our death or incapacity. Once our attorney drafted the document and we
retitled our assets, we would essentially go on living our lives as
normal. When we died or became
incapacitated, the successor trustee would automatically take title to the
property and distribute it according to our estate plan, largely bypassing the
probate process.
Note: The information above is not legal advice and is not the basis of an attorney-client relationship. If you need assistance, you can hire an attorney to assist you with your individual legal needs.
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