Out-of-State Properties in Your Estate Plan in Illinois

 Posted on March 27, 2024 in Estate Planning

When you live in Illinois but have property in multiple states, estate planning can become quite difficult. You will need to account for the laws in each state where you own real estate or other assets. Proper planning is essential to ensure your wishes are carried out and your loved ones avoid unnecessary hassles and expenses when left with the properties. An Illinois lawyer can help figure out the best way to handle your out-of-state properties to minimize challenges.

Ancillary Probate is Ideal for Out-of-State Properties

When you pass away, your estate will likely need to go through the probate process in Illinois, where your last will and testament are validated, and your assets are distributed according to your wishes. However, if you own real estate in another state, an ancillary probate proceeding is usually required in that state as well.

Ancillary probate is a separate court process in the state where you own the out-of-state property. It allows that state to have jurisdiction over transferring real estate ownership there. Ancillary probate adds complexity, time, and expense to settling your estate, so it is highly advisable to minimize this through proper planning.

Create Revocable Living Trusts

One of the most effective ways to avoid ancillary probate is to place your out-of-state property into a revocable living trust. With a trust, you no longer personally own the property; the trust does. Upon your passing, the property can be transferred to your beneficiaries through the terms of the trust document rather than through probate.

Revocable living trusts are incredibly flexible. While you are alive, you maintain complete control over the trust and its assets. You can revise the trust, transfer properties in and out, or even cancel it entirely. But when you pass away, the trust becomes irrevocable, and the trustee you named follows the instructions you left to distribute assets to your chosen beneficiaries.

Be Mindful of Probate Thresholds

In some states, ancillary probate may not be required if the value of your out-of-state property is relatively small. Many have a “probate threshold” under which property can be transferred to heirs through a simple process or affidavit rather than a formal probate case.

However, probate threshold amounts vary from $10,000 in some states to $200,000 or more in others. These thresholds usually only apply to personal property, like vehicles or bank accounts, not real estate. Remain aware of the laws in each state to take advantage of these simplified processes if your property value qualifies.

Name the Right Executor

Your executor, the person you name to oversee your estate after passing, should live in Illinois or at least be very familiar with Illinois laws. While executors can manage out-of-state assets, it is more straightforward if they are locally based.

Some people opt to name co-executors, where one is familiar with Illinois probate rules, and the other is a resident of the state where the out-of-state property is located. This can streamline the process, though it requires close coordination between the two.

Contact a Cook County, IL Estate Planning Attorney

Numerous tools exist to help manage multi-state property ownership, from revocable living trusts to strategic use of probate exemptions. A DuPage County, IL estate planning lawyer can review your total asset picture and implement an ideal plan tailored to your situation. Jon has held membership in the Family Law Committees of the Illinois State Bar Association, Chicago Bar Association, and the Northwest Suburban Bar Association, so you will be in good hands. Call Anderson Attorneys, P.C. at 847-850-8899 for a free consultation.