Ancillary Probate: When it is necessary and how to avoid it

If you were to survey the general public about a topic like probate you may find that many people don’t quite know what it means. Interestingly, you’ll probably also find that it is almost universally considered something to avoid. This reputation is warranted for a process that often unnecessarily saps its participants of time and money.

Well, it is time to add another component to probate which makes it undesirable. Ancillary probate. An ancillary probate is exactly what it sounds like. It is a supplemental probate proceeding under the umbrella of a bigger probate estate. It is most commonly used when a probate estate needs to be reopened or when a decedent owns property in more than one state. The latter situation provides us with another opportunity to advise people to take the necessary steps to avoid this type of hassle.

Imagine this far-fetched scenario. An individual moves from another part of the country to Arizona to retire. Upon moving here, this individual lives a modest life with a typical estate plan including a will. When this person dies, his heirs begin the expensive process of probating the estate.

However, it appears that our subject also owns a row house back in Philadelphia. This isn’t an especially valuable piece of property but it must be disposed of with the rest of the estate. Here enters the ancillary probate. A second, or ancillary, probate must be filed in Pennsylvania.

Although probate laws vary by state, you will generally encounter similar regulations to those listed in Arizona Revised Statutes §14-4207 which state that a foreign resident property owner must follow all the standard probate rules. You are essentially duplicating your efforts, and your costs, for this one property. On top of that, different states have different rules regarding estate taxes. Pennsylvania’s estate tax applies regardless of the size of the estate.

The scenario laid out above is an actual fact pattern taken from a former client. This client’s father had left behind a very modest estate which was significantly diminished due to all these unnecessary costs. The ancillary probate effectively doubled our client’s probate costs and stuck him with a large and unnecessary tax bill.

The solution to avoiding these excessive costs is an effective estate plan centered around a trust.  Property held by a trust does not need to be probated, regardless of where the property may lie. Further, a trust provides substantial tax benefits that would have benefited our friend from Philadelphia. Finally, a trust is relatively small investment towards your estate plan which can save you and your heirs thousands of dollars.

The Arizona estate planning attorneys at Platt & Westby charge reasonable fixed fees to draft trust and related documents. Contact our office to schedule a free consultation with an experienced Phoenix trust attorney today.