When Maryland residents choose to divide their time residing in our state and another, they must consider the implications for taxes, insurance and even estate planning. Owning real property in more than one state is something to carefully consider during estate planning. Unless the dual ownership is handled through the creation of a trust or other estate planning measure, there is a possibility that the estate will ultimately have to be probated in both jurisdictions. While real property can be owned in more than one state, a person is considered a domicile of only one jurisdiction for tax purposes.
When property is owned in two states, a poorly conceived estate plan may become the financial burden of the heirs. One way to ensure that this does not happen is by creating a trust to own one or more parcels of real property. In this manner, the property can be transferred after death independent of the probate process, thereby saving time and expenses.
It also many benefit those owning real property in more than one state to have a Durable Power of Attorney drawn and established in each locale. This may require listing more than one attorney-in-fact, but if the jurisdictions are a good distance from one another, it may be beneficial to have someone familiar with local laws. In addition, having an Advance Medical Directive, or living will, in each state may also prove beneficial. The laws for these documents may vary by state, so it is important to investigate one’s rights and responsibilities in each location.
Anyone in Maryland who owns property in more than one state, or who is considering living in two or more states, may benefit from understanding the potential tax consequences and acting accordingly. There are several options available for trust creation that may be considered, and the counsel and advice of a trained professional familiar with the laws in the chosen states may be advisable. Estate planning involving multiple jurisdictions can be complicated without the proper protections in place. For individuals and families who are unsure of how best to proceed, it may benefit them to investigate their options for guidance through the estate planning process.
Source: CBS Boston, “How To Protect Your Estate While Living In Two States,” Oct. 19, 2012