Estate planning can be complicated—more so when you own real estate in more than one state. Joint tenancy may stir other legal implications, can add a layer of complexity to the probate process, and even force your heirs to endure additional paperwork. Knowing how to manage such a varied collection of real estate can make the entire process more streamlined and keep your fixed assets in line with your plans. This is why you must seek assistance from an acclaimed expert in estate planning services in New Jersey.
Multi-State Estate Planning in a Nutshell
Each state has specific laws concerning estate planning and real estate. Property laws can differ widely, from how one holds property titles to how the government taxes and probates estates. Make a point to educate yourself about the various state laws for where you hold property. You must consult estate planning attorneys with significant expertise in such state-specific laws. And you can make sure you are complying with all local laws with their help.
With such differences in legal terrain, a cohesive method that takes care of the specific laws of every state is essential. It can be tempting to use different lawyers for properties in different states, but doing so can result in erroneous or even conflicting advice. Ideally, the legal firm will have a national presence or relationships with firms in other states to create a seamless estate plan.
Trusts and Multi-State Estate Planning
One of the major downfalls to owning or opening real estate in two states is to probate your estate in them all when the time comes. Probate can be expensive and take a long time, particularly if one has to do it in multiple states. To get around this, many estate planners suggest putting the out-of-state property in a revocable living trust. Trusts do not go through probate and may therefore permit a private, more seamless transfer of property upon death.
Types of Trusts
You can continue to manage your assets while you are alive and ensure that they are managed after your death, free from probate, if you use a revocable living trust. Irrevocable trusts can also be used for tax-planning purposes, such as to reduce state estate taxes. However, not everyone is comfortable relinquishing control over their trust assets. They may choose to have specialized trusts, like qualified terminable interest property trusts or charitable remainder trusts. And each kind of trust comes with a unique set of advantages as well as disadvantages, so be sure to consult a leading specialist in estate planning services in New Jersey about your options.
Tax Considerations
If you own a home in more than one state, you may also have tax obligations in where it is applicable. The tax thresholds vary widely by state—a few have them set much higher than others, and a handful do not have estate taxes at all. Change the domicile to a state with more attractive tax laws and reconfigure the ownership of the properties to minimize the tax.
Make sure to carefully look at the potential effects of the capital gains taxes and how they combine with estate taxes. Sometimes holding the property in the family can offer substantial tax benefits over selling it before one’s demise. An estate planning lawyer can recommend you actionable strategies to better manage these tax consequences. You may call us at Northeast Solution to learn about our estate planning services in New Jersey!
