What should you consider if you own out-of-state real estate?
If you own real estate outside of California, it is worth taking some extra steps to ensure that it will get distributed in accordance with your wishes at the time of your death.
Use of Will
If you are using a Will as your primary estate planning document, check how the laws of the non-California state where you own property will affect your ability to transfer that asset at the time of your death.
Some areas of investigation include understanding what the probate process is like in the other state (i.e., how long does it take and how much will it cost?). You should also check to see whether the other state has its own inheritance or estate tax. Probate in California can be extremely expensive and time consuming, so for people owning California real estate (whether living in California or outside of California), it's especially important to engage in estate planning.
Even though someone may follow the proper rules in California when signing a Will, it's important to check that it also complies with the laws of the state where you own real estate. Doing so will minimize the likelihood that your Will will be considered invalid under the laws of the other state.
Owning real estate outside of California may mean that a lawyer in that state needs to be engaged to determine the proper steps to distribute your property after you pass away. It's a good idea to gain an understanding of the estimated cost of transferring your assets, as well as the potentially beneficial strategies to reduce the friction of the transaction (e.g., simplify the process, reduce costs, reduce delays).
Owning real estate outside of California introduces additional complexities to the estate planning process that can cause potential issues for beneficiaries. It's therefore important to get a handle on these challenges before something happens so that your beneficiaries are not met with unexpected difficulties.