Vacation Home Owners: The Tale of Two Estates

While more than 19 million Americans call New York state home, countless other non-residents own second homes in the state. Similarly, over 19 million Americans call Florida home but many non-resident retirees and snowbirds own vacation homes in the Sunshine State to enjoy the warmer climate in the winter months.

The problem

Whether you own a second home in Florida or New York, you should be aware that owning a second home in another state will expose your estate and loved ones to additional costs and burdens when you pass away.

If you are a resident of Florida or New York with a second home in the other state that is solely in your name, both states will require your estate representative to commence what is commonly referred to as an ancillary estate administration in order for that representative to have authority to sell or distribute your second home to your beneficiaries. In other words, your estate representative and beneficiaries will have to deal with essentially two separate estates — one in your state of domicile and the other in the state where your second home is located.

If you are a Florida resident with a second home in New York that is worth more than $100,000, your estate is looking at a $420 filing fee. If the home is worth more than $500,000, you face a hefty $1,250 filing fee. Of course, the largest expense for a New York ancillary probate is the legal fees your estate will incur — likely a couple thousand dollars.

Costs aside, ancillary probate proceedings can be rather burdensome and time consuming, thereby delaying timely administration of your assets. Such a proceeding typically requires obtaining waivers from interested parties and the New York State Department of Taxation and Finance. If an interested party is not willing to sign a waiver (for example: a disgruntled child), then he or she will have to be issued a citation, and a court appearance from the estate attorney will be necessary. Moreover, your estate’s attorney will typically have to obtain court-certified copies of your will and other court documents filed in the court of your state of domicile. This typically adds additional costs and delays.

If you are in the reverse situation — you are a New York resident but own a vacation home in Florida, you are still facing the same scenario of an ancillary estate-administration proceeding in Florida. The filing fees are lower than New York, but again the biggest costs for your estate are the legal fees along with the same hassles and delays that arise from commencing an ancillary proceeding.

The solution

Your estate representative can offer a number of solutions for you to avoid having to commence an ancillary estate administration. The simplest solution is to deed your second home to you and your spouse jointly with right of survivorship. Upon your passing, the home automatically vests in the name of your surviving spouse. The problem with this option is that when you pass away, your spouse is now facing the same issue of an ancillary proceeding when he or she passes.

Another popular option is to title the property into a living trust or LLC. By deeding your second home into a trust or LLC created during your lifetime, an ancillary probate proceeding is not necessary. This is because the property is not owned by you personally when you pass away; it is owned by your living trust or the LLC. 

You should always consult with a qualified attorney to discuss what options are best for your particular situation.             

Ryan T. Emery is an attorney with Mackenzie Hughes LLP in Syracuse and a member of the firm’s estates department. He is admitted to practice law in New York and Florida. Emery focuses his practice in the areas of estate planning and trust and estate administration in both states. Contact him at remery@mackenziehughes.com. This Viewpoint article is drawn from the Mackenzie Hughes Blog, called ‘Plain Talk.”