Estate planning considerations when you have properties in more than one state. To make this theme clearer, I'll begin with an inquiry that came to me.

A Gentleman's Dilemma: A Case Study

A gentleman's father had properties in Texas and in Nevada. He left Texas and spent his latter years in Nevada and had several properties there, as well as several properties in Texas. The gentleman's father hired an attorney and the attorney basically set up an irrevocable family trust.

However, what the problem now is is that while the family trust was designed to gather all of the properties from Texas, there was a step that was missed, and the step that was missed was taking the property that belonged to the gentleman in his individual name and transferring it to the family trust. Because if the property had been transferred to the family trust, then the trust would have been able to reach it and they wouldn't have to now probate the will, because they did a will.

Even though they had a trust, they did what I always do as an insurance policy for properties that get left out of or not identified in the trust. I always basically have a will. Well, he had a will. However, they're going to have to use that will and basically come to the probate court in Dallas County, where the properties are situated, to go through that process. And because the trust is set up in such a manner, they have what you call a testamentary clause in the trust, which says, "Okay, anything that I have that wasn't gathered and transferred in the trust while I was alive." Then you got to go to that state and get it and bring it back to put in the family trust so that it could be distributed.

So now this gentleman has to come to Texas, to probate the will and get the property. The property now has to come back to Nevada. He'll get to sell it. He'll be able to liquidate it in Texas. He'll be able to sell the Texas property, but the proceeds from the property now will have to come back to Nevada for distribution.

The Lesson

So clearly that misstep of not transferring that Texas property into the irrevocable family trust is now causing these people to do the very thing that they were trying to avoid, and that is they were trying to avoid probate. But if you don't transfer all of your properties into a family trust, then you're going to have to go to every state to probate that will. And if you didn't have a will and you were advised that your trust was good, it's not sufficient if you have properties in other states. If you don't have a will, then you're going to have to do an heirship proceeding and ask for an application for letters for an independent administration of your estate. So these are considerations that you need to make when you have properties in multiple jurisdictions.