Why multi-state estate planning needs its own checklist
Owning property in more than one state exposes you to different probate rules, titling practices and state tax regimes. That reality turns a basic will into only one part of an effective plan. Multi-state owners face a higher chance of “ancillary probate” (separate probate proceedings in each state where real estate is located), coordination headaches for beneficiary designations, and potential state-level estate or inheritance taxes. This checklist focuses on practical, high-impact steps you can take to reduce delays, legal fees, and family friction.
(For federal tax and estate guidance, see the IRS; for consumer-focused guidance on planning and probate, see the Consumer Financial Protection Bureau (CFPB).)
Quick checklist (action items)
- Inventory all real property and note the state and county of each parcel.
- Confirm how each property is titled (individual, joint tenants, tenants in common, LLC, trust).
- Fund a revocable living trust or confirm other probate-avoidance tools where appropriate.
- Update beneficiary designations on retirement accounts and life insurance; align them with your overall plan.
- Consider transfer-on-death deeds or beneficiary deeds where state law permits.
- Appoint powers of attorney and health-care proxies that work across your primary states of residence.
- Review potential state estate or inheritance taxes for each state where you own property.
- Coordinate business and partnership agreements with your estate plan.
- Keep an accessible, up-to-date digital and physical file of deeds, titles, trusts, and contact information for advisors.
- Schedule a coordinated review with an estate attorney licensed in the relevant states.
How multi-state issues typically work
Real estate is governed by the law of the state where the land sits. If you die owning real property outright in State A and State B, most states require a local probate (ancillary probate) to change the ownership for real estate located there. Ancillary probate is usually limited in scope (it only addresses the out-of-state real property), but it adds time and cost to settlement. A properly funded living trust, properly titled LLC or other transfer mechanisms can often avoid ancillary probate for real estate. Always verify the approach with an attorney licensed where the property is located.
Unlike real estate, many financial accounts use beneficiary designations (payable-on-death, transfer-on-death, retirement beneficiaries) that generally transfer outside probate, but those designations must be reviewed and coordinated so they don’t conflict with trusts or a will.
Sources: IRS, CFPB, and state probate resources (see links and guidance below).
Essential documents and titling decisions (what to include and why)
Below is a practical grouping of the documents and titling moves that matter most for multi-state property owners.
| Document / Tool | Purpose | Why it matters for multi-state owners |
|---|---|---|
| Revocable living trust | Holds title to real estate, investments | Can avoid ancillary probate in many states when property is retitled into the trust and the trust is properly funded |
| Deeds (including beneficiary or transfer-on-death deeds where available) | Transfer title on death without probate in some states | Some states allow beneficiary deeds or TOD deeds—these can be cheaper than probate for single properties |
| LLC or tenancy structures | Asset protection, simplified transfers | Holding rental or investment real estate in an LLC makes transfers governed by business law and operating agreements; check mortgage and tax consequences |
| Last will and testament | Directs distribution of probate assets | Still necessary for personal property and assets not moved into non-probate vehicles; avoid contradictions with trust language |
| Durable financial power of attorney | Gives agent authority over finances if you’re incapacitated | Must be accepted by banks and advisors across states—use a form drafted for multi-state use or get local counsel |
| Advance health care directive / HIPAA release | Health decisions and access to medical records | Health directives are governed by state rules; make sure your agent can act in the states where you spend time |
| Beneficiary designations | Retirement accounts, life insurance | These trump wills in many cases—coordinate beneficiaries with trust and will to avoid surprises |
Practical steps and timeline I use in practice
In my practice, I follow a structured, two-month review process for clients with multi-state real estate:
- Week 1: Create a complete asset inventory and collect deeds, titles, and account statements.
- Week 2–3: Confirm current titling for each property and whether any mortgages or liens restrict transfers.
- Week 4: Recommend probate-avoidance strategies: trust funding, TOD deeds, or entity transfers based on state options.
- Week 5–6: Coordinate beneficiary designations, prepare or update trust/will documents, and draft powers of attorney and health-care directives.
- Week 7–8: Final legal review with attorneys licensed in the states where properties are located; sign and record documents as required.
This schedule is a template—complex situations (business interests, costly tax exposures, or contested inheritances) can take longer and require specialist counsel.
Common mistakes to avoid
- Assuming one will covers out-of-state real property: wills may still require ancillary probate where each parcel sits.
- Forgetting to retitle assets into a trust (“unfunded trust”): a trust that isn’t funded won’t prevent probate for those assets.
- Leaving retirement account beneficiaries inconsistent with the rest of the plan.
- Not checking whether transfer-on-death or beneficiary deeds are valid in a property’s state.
- Overlooking state-specific estate or inheritance taxes and filing requirements.
State taxes and residency considerations (keep it practical)
State-level estate or inheritance taxes differ by state and can change. Some states impose taxes on estates above a threshold; others tax beneficiaries directly. Residency and domicile rules also affect which state’s income or estate rules apply. Because thresholds and rules change, confirm the current law with state revenue departments or your attorney before acting. For federal matters and general tax guidance, consult the IRS (https://www.irs.gov) and for consumer-oriented guidance on probate and estate settlements see the CFPB (https://www.consumerfinance.gov).
Real-world example (brief)
A client with homes in California and Florida faced ancillary probate in both states when their will alone governed transfers. By funding a revocable living trust and retitling both properties into the trust, we removed the need for a separate probate in the secondary state and simplified the transfer for survivors. Note: not every situation qualifies for that exact fix—mortgage clauses, community property rules, or creditor claims can require alternative planning.
Linkable resources and next steps
- For detailed guidance on funding trusts and ensuring assets follow your estate plan, see our Trust Funding Guide: “Trust Funding Guide: Ensuring Assets Follow Your Estate Plan” (https://finhelp.io/glossary/trust-funding-guide-ensuring-assets-follow-your-estate-plan/).
- For a focused discussion on residency, real estate and tax coordination, see “Multistate Estate Planning: Residency, Real Estate, and Taxes” (https://finhelp.io/glossary/multistate-estate-planning-residency-real-estate-and-taxes/).
- If you need a regular maintenance routine, see “Estate Plan Maintenance: Annual and Event-Driven Reviews” (https://finhelp.io/glossary/estate-plan-maintenance-annual-and-event-driven-reviews/).
Professional tips
- Start with a property-by-property inventory and confirm the county recorder’s version of the deed—errors and outdated names are common.
- Use a trust for high-value or multiple properties to centralize administration, but ensure every title is moved into the trust (“funding”).
- Ask an attorney whether a local transfer-on-death deed is a better low-cost fix for a single vacation home.
- Coordinate life insurance and retirement account beneficiary designations to avoid unintended distributions.
- Revisit your plan after any move, marriage, divorce, birth, or sale/purchase of property.
When to get professional help
Engage an estate attorney licensed where your properties are located whenever you:
- Own property in more than one state, or
- Have business interests tied to real estate, or
- Face significant potential estate or inheritance taxes, or
- Anticipate a contested distribution or complex family dynamics.
Estate planning crosses law, tax and financial planning. Coordinated advice from an attorney, CPA or tax advisor, and your financial planner gives the best chance of a smooth transfer.
Disclaimer
This article is educational and does not constitute legal, tax or investment advice. State laws and tax rules change; consult an estate planning attorney or tax professional licensed in the relevant states before making decisions. For federal guidance, consult the IRS (https://www.irs.gov). For consumer-facing probate guidance, see the Consumer Financial Protection Bureau (https://www.consumerfinance.gov).
Author note
As a financial editor with experience coordinating estate plans for multi-state clients, I emphasize documentation, funding trusts, and advance coordination with counsel in each relevant state—the practical steps above reflect that approach and aim to reduce avoidable probate, delays and legal costs.
