In an era where state boundaries are no barrier to movement, and airplanes can whisk us off to remote places with relative ease, it is not unique to own property out of Massachusetts, or for people who are not domiciled in Massachusetts to continue to own property in this state. There are some income tax issues if the property is investment property, in either situation, but they can be dealt with rather easily by using a competent accountant to prepare your Tax Returns.
What is not so easy is dealing with out of state property when you pass away. This blog will explain the basic Massachusetts procedures for what is called “Ancillary Probate” with the thought that other states probably have similar types of rules, which can make even more expensive the cost of probating your estate, or the estate of a family member.
If a non-Massachusetts domiciliary dies owning property in Massachusetts, these are the procedures which must be followed to give “good title” to a successor owner:
1. The out of state Will is considered a “foreign” Will, and a petition for allowance of foreign Will has to be filed in Probate Court
2. If the Executor(s) are not residents of Massachusetts, then they must appoint a Massachusetts resident for the service of process
3. A bond must be filed
4. The Petitioners must provide a copy of the Will, Death Certificate and Letters of Appointment from the non-Massachusetts state.
5. Since the Massachusetts probate laws changed as of April, 2012, there are the formal and informal proceedings to be appointed Executors in this state. For Title purposes in the sale of real estate, it is highly recommended to request a formal Proceeding. If a Power to Sell is set forth in the Will, no License to Sell is required. Otherwise, a Massachusetts License to Sell will be required in certain circumstances.
If you are seeing “dollar signs” as you review the procedures set forth above, you have paid good attention. But, you may be able to reverse some of these expenses with a little planning. My suggestion would be to inquire from local counsel how difficult it would be to place your out of state property into some sort of Nominee Trust or Limited Liability Company. If that step is taken, you will at least have the real estate in an entity which can convey. You may still need to pay state inheritance tax on the property, but you will NOT be required to take all the expensive and time-consuming steps of Ancillary Probate. Similarly, if you have family or friends, who reside out of Massachusetts, but own property here, they may want to take the same precautionary steps to streamline the liquidation of their estates when they pass away. As always, I am available to assist people with these issues. It is another case of “plan now, or pay later”
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