How do I handle property owned in another state

It started with a phone call from Dax. He’d meticulously planned for years, a valid will, durable power of attorney… everything seemed in order. His mother, living in Arizona, passed away unexpectedly. The problem wasn’t the grief, it was the small cabin in Montana. A family heirloom, it represented far more than its $180,000 market value. But now, months later, Dax was staring down the barrel of a second probate – in Montana – and legal fees were quickly eclipsing the cabin’s worth. He’d assumed his California estate plan would cover everything. It didn’t.

As an Estate Planning Attorney and CPA with over 35 years of experience here in Escondido, I see this scenario play out far too often. It’s a classic oversight, and a costly one. The assumption that a single estate plan, drafted in one state, seamlessly covers assets located elsewhere is simply incorrect. Probate is a state-level issue, and each state has its own rules, procedures, and costs. Navigating these differing jurisdictions can be a logistical and financial nightmare for your heirs.

What happens to out-of-state property when I die?

When you pass away owning real estate in a state other than your state of residence, that property generally must go through probate in the state where the property is physically located. This is called “ancillary probate.” It’s a separate probate proceeding from your primary probate case in your home state. Each proceeding has its own court filing fees, executor/administrator fees, appraisal costs, and attorney’s fees. As Dax discovered, this can quickly add up, significantly diminishing the value of the estate.

Can I avoid ancillary probate?

Yes, and there are several effective strategies. One of the most common is using a Revocable Living Trust. Properly titling the out-of-state property into your trust before your death allows the successor trustee to distribute the property according to the trust terms, bypassing probate altogether—even ancillary probate. This is because the trust, not you, legally owns the property.

Trust Ownership: Transferring ownership to a trust before death is crucial to avoid probate, including ancillary probate.
Beneficiary Designations: For certain property types, such as bank accounts or brokerage accounts, beneficiary designations can bypass probate in both your home state and any state where the account is held.
Joint Ownership: Holding property with “right of survivorship” means the surviving owner automatically inherits the property, avoiding probate. However, consider the potential gift tax implications.

What about the small estate rules? Do they apply across state lines?

Potentially, but not always seamlessly. While the Small Estate Threshold for deaths occurring on or after April 1, 2025, the small estate threshold for personal property is $208,850 (per CPC § 13100). This allows heirs to skip full probate via affidavit, the rules vary dramatically from state to state. Some states have lower thresholds, others higher. Even if the value falls below the threshold in both states, the procedures for utilizing the small estate process may be different, requiring local counsel’s expertise. Furthermore, under AB 2016, primary residences valued at $750,000 or less qualify for simplified transfer for deaths on or after April 1, 2025. In 2026, this remains active law, allowing qualifying homes to bypass formal probate via a simplified petition rather than a 12-month court process.

How does my role as a CPA help with out-of-state property?

Beyond the legal aspects, my dual credential as a CPA provides a significant advantage. Understanding the tax implications of out-of-state property is critical. Transferring property – even to heirs – can trigger capital gains taxes. However, a “step-up” in basis to fair market value occurs at death, potentially eliminating these taxes. Proper valuation of the property is essential, and I can guide you through that process, ensuring you’re not overpaying on taxes. As a CPA, I also have experience dealing with multi-state tax returns, a frequent necessity when estates include out-of-state assets.

What if I don’t address this now? What are the risks?

The biggest risk, as illustrated by Dax’s situation, is increased costs and delays. Ancillary probate can take months, even years, to resolve, tying up assets and creating emotional stress for your family. Furthermore, the 4-month creditor claim period outlined in Probate Code § 9100 applies to each probate proceeding, extending the overall estate administration timeline. Unless explicitly waived in the Will or by all beneficiaries in writing, the court mandates a Surety Bond per Probate Code § 8482. This bond protects the estate’s value; the premium is calculated based on the total value of personal property plus annual income, often costing the estate thousands in non-refundable fees. And, thankfully, the 2026 ‘TCJA Sunset’ was officially averted by the One Big Beautiful Bill Act (OBBBA). As of January 1, 2026, the Federal Estate Tax Exemption is permanently set at $15 million per person ($30 million for married couples), effectively eliminating the federal ‘Death Tax’ for nearly all families.

How do California courts decide whether a will reflects true intent or creates ambiguity?

In California, a last will and testament is reviewed under probate standards that focus on intent, capacity, and execution. Clear drafting reduces ambiguity, limits misinterpretation, and helps families avoid unnecessary conflict during estate administration.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Official 2026 California Probate Standards & Resources

• Probate Process: California Courts – Probate Overview
  This official judicial guide provides a high-level roadmap of the California probate system, defining the roles of executors and administrators while clarifying which assets are subject to court supervision and which bypass the process entirely.
• Unclaimed Property: California State Controller – Unclaimed Property
  A vital resource for estate representatives to search the “Estates of Deceased Persons File,” which contains millions in forgotten bank accounts, uncashed checks, and insurance benefits that must be marshaled and reported as part of a complete estate inventory.
• Probate Code: Probate Code § 13100 (Small Estate Affidavit)
  The primary statute governing the simplified collection of personal property; as of 2026, it allows successors to bypass probate for estates valued at $208,850 or less (for deaths after April 1, 2025), provided a 40-day waiting period has elapsed.
• Local Court Rules: Riverside Superior Court – Probate Division
  Provides essential “Local Rules” and “Proposed Form Changes” effective January 1, 2026, including specific requirements for remote appearances and the mandatory use of the Riverside-specific e-filing system for all probate matters in the Inland Empire.
• Tax Guidelines: Franchise Tax Board – Estates and Trusts
  The official California tax portal for fiduciaries, outlining the 2026 filing requirements for Form 541 (Fiduciary Income Tax Return) and explaining when real estate withholding (Form 593) is required for the sale of inherited property.