You are a Michigan resident, but you do not spend all year in Michigan. You may spend part of the year in another state, such as Florida or Arizona. You may even own a mobile home, condominium or house in the other state. Do you know what would happen to that property after you are gone?
If your will is probated in Michigan, that probate does not generally give your personal representative any authority to transfer real estate in another state to your beneficiaries. Before that real estate can be transferred, your will must also be probated in that other state. This additional proceeding is often called ancillary probate.
Probating in another state can be very expensive. I have often seen costs of an ancillary probate proceeding in Florida for a single parcel of real estate to be double or even triple the costs of the main probate proceeding in Michigan.
For personal property in another state, such as bank accounts or titled vehicles, including automobiles and mobile homes, the Michigan probate should give your personal representative the authority to transfer ownership of that property to your beneficiaries or sell it.
I occasionally come across a state department of motor vehicle office that will not honor out-of-state probate proceedings. This then necessitates the filing of probate proceedings in that state, resulting in additional costs and expenses.
One easy way to avoid probate and accomplish your estate planning objectives is to create a revocable living trust. You then would title all of your properties, including the out-of-state ones, into the name of your trust. After your death, your successor trustee can then just transfer all of your properties to your beneficiaries without the need for any type of probate in Michigan or any other state.
If you spend more than 6 months of a year in another state, you may be considered a resident of that other state. Can you still have your Michigan attorney draft your estate plan?
The answer is a qualified, yes. If you have a revocable living trust based estate plan, you can generally choose the state law which governs your trust. So no matter what state of which you are a resident, you can have Michigan trust drafted by a Michigan attorney.
However, your will, financial and health care powers of attorney, living will and anatomical gifts are typically governed by your state of residency. If you are a resident of another state and your Michigan attorney drafts those documents, they may not be necessarily be valid in your home state.
In these circumstances, I recommend that you have an attorney in your residency state review your will, financial and health care powers of attorney, living will and anatomical gift and amend them to comply with the laws of your home state. In most of these types of cases that I have handled over the years, I generally see the costs of these reviews to be in the neighborhood of $400 to $700. This is however, usually in addition to the cost of your Michigan attorney drafting your revocable living trust based estate planning documents.
On the other hand, if you want only a will based estate plan, which includes your will and financial and health care powers of attorney, I often recommend that you deal directly with the attorney in your home state. If you use an attorney in both Michigan and your home state for your will based estate plan, you could easily double the cost of your plan. The down side of a will based estate plan is that there will need to be probate in your home state and any other state in which you owned real estate.
You may attempt to avoid this probate of out-of state real estate by titling it jointly with others. In order for joint ownership to work, you not only must have it drafted correctly, you have to guarantee that your joint owner doesn’t get mad, doesn’t get sick, doesn’t get sued, doesn’t get greedy or doesn’t die in the wrong order.
We have talked about how to take care of your stuff that is out-of-state at the time of your death. But what happens if you die while you are out-of-state? How are your remains going to get back to Michigan? Often times, your loved ones just contact a local funeral home in the state where you died, who will then ship your remains to the state of Michigan. I have seen the costs of such shipments be in the thousands and thousands of dollars.
What you may not know is that your local Michigan funeral home can make the arrangements for the transport of your remains from another state at a much more economical rate. If you want your loved ones to save on the cost of transporting your remains back to Michigan, give them instructions about what to do in such situations, such as contacting your local Michigan funeral home. You can also purchase a travel insurance policy which coverage includes the return of your remains back home to Michigan in the event of your untimely death on your trip.
With a little bit of planning, you can make it easier for your family in such an instance. Your loved ones will then know who to contact so that the transport of your remains would be made in the most efficient and economical manner. If you don’t do the planning, your loved ones surviving could end up with a huge bill for your after death expenses.
By: Matthew M, Wallace CPA, JD
Published edited August 28, 2011 in The Times Herald newspaper, Port Huron, Michigan as: Snowbirds: Be careful when planning your estate