How Owning Property in Two States Affects Your Florida Estate Plan

By: Mary Saunders, Esq.

For many Southwest Florida homeowners, life is divided between two places. Winters may be spent in Naples, Bonita Springs or Fort Myers, while summers mean returning to a longtime home in New York, Massachusetts, Michigan or another northern state. Having two homes offers flexibility and the opportunity to enjoy different seasons, but it can also create estate planning questions that are easy to overlook.

What happens to both properties when you die? Will your family need to handle probate proceedings in two states? Does your existing will address Florida law? And if you consider Florida your primary home, have you taken the necessary steps to establish residency?

Owning real estate in multiple states requires an estate plan that accounts for differences in state law, how each property is titled, and what you want to happen to those properties in the future.

Which State Is Your Legal Home?

One of the first questions for homeowners with residences in multiple states is where they are legally domiciled. Domicile generally refers to the state you consider your permanent home and the place you intend to return to whenever you are away.

For example, an individual who spends six months in Florida and six months in New York may consider Florida to be his or her permanent home. However, simply spending a certain number of days in Florida does not automatically establish Florida domicile for all legal, tax, or estate planning purposes. Instead, domicile is determined by examining the individual’s intent and the surrounding facts and circumstances.

Relevant factors in determining domicile include where you hold a driver’s license, register to vote, file state and/or federal tax returns, claim property tax exemptions, maintain primary banking and investment relationships, and participate in community, social, religious, and professional activities. Most importantly, your actions should consistently reflect your intention to make Florida your permanent home.

Domicile is significant because it can affect estate administration, state tax obligations, creditor rights, and the laws governing certain aspects of your estate plan. When an individual has substantial connections to more than one state, competing claims of residency can arise. This may subject family members and fiduciaries to additional scrutiny, administrative burdens, and potential disputes during incapacity proceedings or after death. Taking proactive steps to establish and document Florida domicile can help reduce uncertainty and provide greater assurance that your wishes will be honored and that your estate will be administered under Florida law.

Could Your Family Face Probate in Two States?

One of the most significant estate planning concerns for individuals who own homes in multiple states is the possibility of probate proceedings in more than one jurisdiction.

Probate is the legal process used to administer certain assets after a person’s death. If you are domiciled in Florida but own a second home in another state in your individual name, your estate may require a Florida probate proceeding as well as a separate probate proceeding in the state where the other property is located.

This additional proceeding is commonly called ancillary probate. Ancillary probate may require retaining local counsel, complying with another state’s probate laws and procedures, additional court filings, and increased administrative expenses. It can also delay the ultimate distribution of assets to beneficiaries.

The reverse situation can also occur. If you are domiciled outside Florida and die owning Florida real property that is subject to probate, your personal representative may need to initiate a Florida ancillary administration to transfer or administer the property.

Whether probate is required depends on several factors, including how the property is titled, whether it is owned through a trust or other entity, the availability of transfer-on-death or similar arrangements under applicable law, and the laws of the state where the property is located. As a result, the most important planning question is not simply where you own property, but whether your estate plan provides a method for transferring each property to its intended beneficiaries without unnecessary court involvement.

For many individuals who own homes in multiple states, properly funding a revocable trust or utilizing other ownership structures can help reduce or eliminate the need for ancillary probate and simplify estate administration for surviving family members.

How Are Your Florida and Out-of-State Homes Titled?

How real estate is titled can significantly affect what happens to the property after death. Consider the following ownership arrangements:

• Individual ownership. Property held solely in your name may require probate before ownership can be transferred to your beneficiaries.
• Joint ownership with rights of survivorship. Depending on state law and the deed, ownership may pass directly to the surviving owner without probate at the first owner’s death.
• Tenancy by the entirety. Florida recognizes this form of ownership for qualifying married couples, which generally provides survivorship rights. Other states may have different rules.
• Trust ownership. Real estate properly transferred to a revocable trust may pass under the trust’s terms without requiring a separate probate proceeding for that property.
• Life estate or enhanced life estate deed. Some states permit ownership arrangements that designate who will receive the property at the owner’s death while allowing the owner to retain certain rights during life. In Florida, an enhanced life estate deed, often called a “Lady Bird Deed,” can provide a means of transferring property at death without probate while preserving the owner’s control during life.
• Transfer-on-death deed. Some states allow a deed that names a beneficiary who automatically receives the property upon the owner’s death without probate. Florida does not currently recognize transfer-on-death deeds for real property.

The appropriate ownership structure depends on your goals, family circumstances, asset-protection considerations, tax planning objectives, and the laws of the state where the property is located. A title review of each residence should be coordinated with your overall estate plan to ensure that ownership aligns with your intended disposition and helps minimize unnecessary probate proceedings.

Should You Put Both Homes in a Revocable Trust?

A revocable trust can be a useful estate planning tool for people who own real estate in multiple states. When properly established and funded, the trust allows a successor trustee to manage and distribute trust assets according to its terms after your death. Because property titled in the name of the trust is generally not owned individually at death, trust-owned real estate may be transferred without the need for separate probate proceedings in each state where the property is located.

For example, a Florida resident who owns a summer home in Massachusetts may be able to transfer both properties into a revocable trust, subject to applicable state law and title requirements. If properly implemented, this arrangement can simplify administration for the successor trustee, reduce costs, and help avoid the delays commonly associated with ancillary probate proceedings.

It is important to understand, however, that signing a trust agreement alone does not accomplish these objectives. The trust must be properly funded, which typically requires reviewing existing deeds and, where appropriate, transferring title to the trust. Before making any changes, consideration should be given to issues such as existing mortgages, title insurance coverage, homestead protections, property tax exemptions, lender requirements, and state-specific laws governing trust ownership of real estate.

A revocable trust is also not a universal solution. While it may help avoid probate, it does not eliminate all post-death administration responsibilities, protect assets from the owner’s creditors during life, or automatically reduce estate taxes. The effectiveness of a revocable trust depends on the owner’s circumstances, the nature of the assets involved, and the extent to which the trust is properly integrated into the overall estate plan.

How Does Florida Homestead Affect Your Estate Plan?

Florida homestead law deserves particular attention when an estate plan includes a Florida residence. The term homestead can refer to several distinct legal protections, including property tax benefits, certain creditor protections, and restrictions on transfer of homestead at death. While these protections are related, they serve different purposes and do not necessarily share the same eligibility requirements.

For example, a homeowner may qualify for Florida’s homestead property tax exemption yet face separate legal questions regarding creditor protection or the disposition of the property upon death. As a result, homestead should not be viewed as a single concept, but rather as a collection of important legal protections that must be considered individually.

Under Article X, Section 4 of the Florida Constitution, restrictions may apply to the devise of homestead property when the owner is survived by a spouse or a minor child. Consequently, a will or trust provision directing who should receive a Florida residence may be ineffective to the extent it conflicts with Florida homestead law. In certain circumstances, the surviving spouse may receive rights in the property regardless of the owner’s contrary testamentary intent.

Florida homeowners should also consider whether the property qualifies for the homestead property tax exemption and how any contemplated transfer, trust funding, or change in ownership could affect that benefit. Likewise, individuals who maintain residences in multiple states should carefully evaluate which property, if any, serves as their legal homestead and whether their domicile and homestead positions are consistent.

For seasonal residents, snowbirds, and owners of multiple homes, coordinating domicile planning, homestead protections, property tax benefits, and estate planning objectives is particularly important. A properly structured plan can help preserve valuable homestead protections while reducing the risk of unintended probate, tax, or inheritance consequences.

What About Estate and Inheritance Taxes in the Other State?

Florida currently does not impose a separate state estate tax or inheritance tax. As a result, establishing Florida domicile can provide significant tax advantages when compared to certain other states. However, Florida domicile alone does not necessarily eliminate all state death-tax exposure.

When a Florida resident owns real property in another state, that property may be subject to the estate tax, inheritance tax, or other death-related tax laws of the state in which the property is located. Whether a tax applies depends on a variety of factors, including the state’s laws, the value of the property, the ownership structure, available exemptions, and, in some jurisdictions, the beneficiary’s relationship to the deceased owner.

For example, some states impose estate taxes based on the value of property located within their borders, even when the owner was domiciled elsewhere at death. Other states impose inheritance taxes that are determined in part by who receives the property. Consequently, a Florida resident who owns real estate in another state may still have filing obligations or state-level tax exposure despite having successfully established Florida domicile.

Federal estate tax considerations may also be relevant, depending on the value of the taxable estate and the law in effect at the time of death.

Accordingly, individuals who own real estate in multiple states should evaluate not only probate and domicile issues, but also the potential state and federal transfer-tax consequences associated with multistate property ownership.

Do Your Estate Planning Documents Work in Both States?

Individuals who purchase a Florida home often continue relying on wills, trusts, powers of attorney, and health care documents that were prepared years earlier in another state.

Although Florida may recognize many properly executed out-of-state estate planning documents, legal recognition does not necessarily mean the documents remain optimal for your current circumstances. Differences in state law, execution requirements, fiduciary powers, and administrative procedures can create unintended complications during incapacity or after death.

Accordingly, a comprehensive estate planning review should address the following:

• Wills and trusts. Do your estate planning documents reflect your current domicile, family circumstances, and intentions for property located in multiple states?
• Powers of attorney. Does your durable power of attorney provide the authority necessary to manage financial affairs, real estate transactions, trust matters, and other assets located in each relevant jurisdiction?
• Health care documents. Are your health care surrogate designation, living will, and any existing advance directives consistent with Florida law and appropriate for the locations where you are most likely to receive medical care?
• Personal representatives and successor trustees. Are the individuals you have nominated legally qualified, practically available, and willing to serve? Have you considered whether residency requirements, family dynamics, or geographic distance could affect administration?
• Beneficiary designations. Do beneficiary designations for retirement accounts, life insurance policies, annuities, and other non-probate assets coordinate with the overall estate plan and intended distribution scheme?
• Real estate ownership and titling. Does the ownership structure for each residence align with your probate-avoidance, asset-protection, tax-planning, and succession objectives?

When attorneys in multiple states are involved, coordinating their efforts can help ensure that documents work together as intended. Without careful coordination, provisions in one state’s documents may conflict with property ownership arrangements or planning strategies implemented in another state.

For many individuals who divide their time between Florida and another state, purchasing a Florida residence presents an ideal opportunity to conduct a comprehensive review of their entire estate plan. Updating outdated documents and confirming that all components of the plan are properly coordinated can help reduce uncertainty, simplify administration, and better ensure that assets pass according to the owner’s wishes.

When Should You Review Your Estate Plan?

Acquiring a second home, selling a longtime residence, changing domicile, or experiencing significant family changes are all events that should prompt a review of your estate plan. As your real estate holdings evolve, your estate planning documents and ownership arrangements should be reviewed to ensure they continue to reflect your goals and family’s needs.

A comprehensive estate planning review should consider not only who will inherit each property, but also how ownership and management of those properties will be handled after your death. In some cases, a residence may be intended for sale with the proceeds distributed among beneficiaries. In others, a vacation home or family retreat may hold sentimental value and be intended as a legacy asset for future generations.

When multiple beneficiaries are expected to inherit a property together, additional planning may be appropriate. Without clear guidance, disagreements can arise regarding the use, maintenance, and disposition of the property. For that reason, estate planning documents may address questions such as:

• How will maintenance, repairs, property taxes, insurance premiums, and other ownership expenses be allocated?
• Will beneficiaries have equal rights to use the property?
• Who will be responsible for managing the property and making decisions regarding upkeep and improvements?
• Can a beneficiary transfer or sell his or her interest to a third party?
• Under what circumstances may the property be sold?
• If one beneficiary wishes to sell but others prefer to retain the property, is there a buyout mechanism or dispute-resolution process?

These issues can be particularly challenging when beneficiaries have different financial circumstances, personal priorities, or emotional attachments to the property. Addressing these matters in advance can help minimize conflict, preserve family relationships, and provide a practical framework for decision-making.

In some situations, a trust, limited liability company, or other ownership structure may be useful for managing a family residence intended to remain in the family for an extended period. Such arrangements can establish rules governing ownership, use, maintenance, succession, and transfers while providing a mechanism for resolving disputes.

Coordinating Your Estate Plan Across State Lines

Owning homes in Florida and another state can create estate planning and administration challenges, but proactive planning can help address many of the issues that commonly arise. A thoughtful review of domicile, property ownership, probate exposure, homestead protections, beneficiary designations, and applicable tax laws can help ensure that your properties pass according to your wishes and with as little complexity as possible.

Because the laws governing real estate, probate, taxation, and homestead rights can vary significantly from one jurisdiction to another, homeowners with multistate property interests should periodically review their estate plans to confirm that all components remain properly coordinated. Decisions regarding how property is titled, whether a trust should be used, and how beneficiaries will inherit and manage real estate can have lasting consequences for both family members and fiduciaries.

With careful planning, homeowners can reduce the risk of ancillary probate, minimize administrative burdens, preserve valuable legal protections, and provide clear guidance for future generations. The goal is not merely to determine who will inherit each property, but to create a comprehensive plan that facilitates an efficient transfer of wealth while reflecting the family’s values, objectives, and long-term intentions.

At Henderson, Franklin, Starnes & Holt, P.A., our Trusts and Estates attorneys assist Southwest Florida residents and seasonal homeowners with estate planning matters. If you own property in Florida and another state and would like to review how your estate plan addresses both residences, I may be reached at mary.saunders@henlaw.com to schedule a consultation.