Secondary inheritance is the process of additional and concurrent inheritance required when the deceased has real estate or tangible personal property located in another state or states. The laws of the state where the property is located typically govern what happens to that property upon the owner’s death – not the laws of the state in which the deceased lived at the time of death.
Definition and Examples of Secondary Inheritance
“Secondary inheritance” refers to the inheritance proceedings that are required in addition to the primary inheritance proceedings that take place in your home state. Secondary inheritance is necessary because the probate court in the deceased’s home state does not have legal jurisdiction over property located elsewhere.
You may live in Pennsylvania but own a piece of property on the New Jersey shore. The inheritance for that property cannot be conducted in Pennsylvania. Secondary inheritance can also apply to tangible property such as cars, boats, and airplanes that are registered and titled out of state.
Note: Secondary inheritance may become necessary if you own livestock, oil or gas rights, or minerals associated with property located in another state.
How Does Secondary Inheritance Work?
The executor of the primary inheritance – which takes place in the deceased’s state of residence and where the will is admitted to probate – will initiate the secondary inheritance proceedings when it becomes evident that the estate includes assets registered or titled out of state.
State courts often collaborate when secondary inheritance becomes necessary. Other courts are likely to accept the “foreign” will almost automatically once the original court does so. Sometimes secondary courts accept the orders issued by the executor from the original court so that the executor does not have to undergo a duplicate process to obtain another order. This cooperation can streamline the secondary inheritance process.
Disadvantages of Secondary Inheritance
One of the biggest drawbacks of secondary inheritance is the increased cost of administering more than one estate, including multiple court fees, accounting fees, and attorney fees. This can occur even if the process is streamlined through cooperation between state courts, and it can drain the estate’s financial reserves.
Note: Your beneficiaries will receive more if you can find a way to avoid secondary inheritance for your out-of-state property.
Another potential issue arises when the inheritance is intestate, meaning the deceased died without a valid will or final document. Inheritance laws determine who receives the deceased’s property when there is no will, and the laws vary slightly across the 50 states and the U.S. capital district.
The legal heir’s entitlement may differ in the state of residence compared to that in the state of secondary inheritance proceedings. This would pose a significant complication.
Can I Avoid Secondary Inheritance?
It is not necessary to undergo probate for any property placed in a living trust, regardless of the location of that property. You can allow the property in your state to pass to your beneficiaries through the probate process of your will, and then simply designate your out-of-state assets in the trust. There will be no need for secondary inheritance for those assets.
You may also consider re-titling property located in other states so that you and the desired beneficiary own it jointly with right of survivorship. For example, you could create a new deed in which you hold the title as joint tenants with right of survivorship if you own a vacation home in Florida that you wish to leave to your son or daughter. They will be able to inherit the property automatically upon your death without going through probate.
Twenty-eight states recognize the existence of beneficiary deeds that allow real estate to pass upon your death without going through probate. Designated beneficiaries in the deeds can take title by recording a statement of beneficiary with the county clerk.
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Sources:
– CEOpedia Management Online.org. “Ancillary Probate.”
– HG.org Legal Resources. “What Is Ancillary Probate?”
– HG.org Legal Resources. “Joint Tenancy in Real Estate.”
– ACTEC. “Transfer on Death Deeds Survey”
– Montana State University Extension. “Beneficiary Deeds in Montana. Page 6.”
Source: https://www.thebalancemoney.com/what-is-ancillary-probate-3505223
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