Death … I know, I know, it’s a tough topic, but we all go to see our Lord and Savior at some point. So bear with me. …
Anyone who has spent time looking at or thinking about an estate plan has likely come across the basics – wills, trusts, etc. But things can take crazy turns when you cross your state line.
Everyone knows Texas likes to do things the “Texas way.” But, turns out, most states like to do things the “[state] way” or at least differently than their neighbor states. The same is true for the way each state handles the passing of property and assets at your death. Probate and estates law is largely controlled by individual states, which means each state could potentially differ from every other state.
I grew up in the Texas Panhandle in the diamond-in-the-rough of Pampa, Texas. It was a short drive to both Oklahoma and Kansas, and New Mexico was not far off either. So it was common for producers to have land or assets outside of the Lone Star State. For many producers, it is common to have assets across state lines.
Many of you know a process called “probate” is potentially necessary to pass your property to your heirs when you die. We could endlessly discuss the nuances of an estate plan and how you can prepare for or, in many cases, avoid probate. However, if you have assets outside of your home state – even temporarily (like cattle grazing in a neighboring state) – you need to consider the potential that probate may be necessary not only in your home state but other states as well.
“Wait? So, my kids would have to do more than one probate?” Answer: “Possibly.”
Luckily, there is a process, generally, called “ancillary probate.” Essentially, ancillary probate is the additional process your heirs seek in the additional state where you had assets at your death. For example, if I pass away in Texas and my heirs seek a Texas probate and estate administration, they may need to seek ancillary probates in other states where I have assets – cattle, bank accounts, land, farm equipment, etc.
Again, states differ in their probate and estates laws. So some states have simple ancillary probate processes, such as simply recording certified copies of the original probate in the public records; some have more complex requirements, such as formally filing a probate proceeding that incorporates the original probate; and some lack any formal ancillary probate process at all.
While ancillary probate is manageable, it is also generally avoidable. There are tools and strategies available to potentially eliminate the need for an ancillary probate – saving your heirs time, expense and headaches.
It is important for your attorney – and your heirs’ attorney seeking the original probate – to know you have assets outside of the state. The attorney will need to determine the ancillary probate processes of the additional states and, in some cases, hire a licensed attorney in each additional state. Additionally, knowing there are assets outside of the state may influence what type of probate should be sought in the original state. For example, in Texas some probates include the appointment of an executor or administrator – essentially the court-appointed person with the authority to represent and responsibility for the estate – and other types do not, such as a “muniment of title.”
Many ancillary probates require an executor or administrator to sign or file something with either a court or in the public records, and many request letters testamentary or letters of administration. If the original probate was a muniment of title, there are no executors, administrators, letters testamentary or letters of administration. “Oooops.”
So if you have assets outside of your home state – or anticipate you will – you should consult with your attorney to plan accordingly. You might avoid an ancillary probate or prepare the attorney and your heirs for an ancillary probate. Either way, planning pays off.
This information is made for educational purposes only and is not intended to be legal advice for any particular reader. Reading this article does not create an attorney-client relationship. Readers are encouraged to consult a licensed attorney for their legal needs. The information is primarily based upon laws of the U.S. and the state of Texas.