What To Do if You Inherit Property Out of State
During a time of sadness and loss, the prospect of dealing with legal roadblocks in the probate process can understandably bring confusion and frustration. Family members naturally want to complete the legal requirements as efficiently and quickly as possible. It is a surprise to some when they discover that multiple probate estates may be necessary to settle all of the legal affairs.
One of the major concerns you may have is when a loved one left property in more than one state. Pennsylvania law requires that when a person passes away with property titled in their name, an estate must be opened in the county where the person passed. Once the estate is opened, all property located in Pennsylvania passes through the deceased’s Pennsylvania estate.
What happens if a loved one passed away as a nonresident of Pennsylvania, but left property located in PA? A common example is when a person died while residing in Florida, but also owned a secondary residence in Pennsylvania. When assets are located in a second state, an additional probate process is required for the state in which the property is located. In cases like the above example, the family would open the primary estate in the Florida county where the decedent passed and create a second estate in Pennsylvania. Attorneys refer the requirement to open probate in an additional state as ancillary probate.
How is Ancillary Probate Different from Ordinary Probate?
Property located in Pennsylvania cannot pass through another state’s probate process. For this reason, an ancillary estate must be opened to comply with Pennsylvania’s law requiring the PA property to pass through PA probate. Ancillary probate is a second probate proceeding which is necessary to transfer the property.
The legal requirements for each state’s probate process varies from state to state. But in Pennsylvania, the ancillary probate process is similar to ordinary probate, although with a number of exceptions. The proposed personal representative of the deceased’s estate must file a petition in the court to open probate, comply with notice requirements and obtain Letters Testamentary or Letters of Administration. It is important to open the primary probate as soon as practical after death because the ancillary probate cannot be opened until the primary probate is opened.
Once the ancillary estate is opened, the actual administration process can begin. There are many steps to administration, but perhaps the most important is to timely file an inheritance tax return with the PA Department of Revenue.
What Happens if Ancillary Probate is Not Opened on Time?
There are a number of pitfalls that you may encounter as an estate representative. Any real estate located in Pennsylvania cannot be sold or transferred until the estate is properly administered. The property located in PA is also subject to PA’s inheritance tax. PA’s inheritance tax law is strict and imposes financial penalties for failing to file an inheritance tax return on time and failing to pay the tax. But the law also provides for a 5% discount if you pay the tax early. Finally, the calculation of the tax amount can be affected by the assets located in other states. For these reasons, we recommend that estate representatives start the probate process in both states promptly.
Can I Serve as the Estate Representative if I Live Outside of Pennsylvania?
We are commonly asked whether someone may serve as an estate representative in Pennsylvania if they live outside of PA. The confusion comes from the fact that states have different laws on this point. But in Pennsylvania, you can serve as the personal representative even if you live out of state. There is one main difference though – a bond must be posted with the probate court.
Attorney Representation for Out of State Probate
The probate process can be difficult, even if you have an experienced probate attorney on your side. But if a family member died in another state, you may face unique challenges. It can be difficult to deal with an estate from out of state, especially if you have never handled an estate before.
As a probate law firm for estate executors, we help settle estates efficiently and reduce stress. If you know someone faced with a probate process or roadblocks to an estate property sale, please have them contact us for a free evaluation.
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