If you live in Illinois but have vacation or rental property out of state, you may be wondering what happens to that property after you die.
The short answer is it depends on the laws of the state where the property is located.
Every state has a default set of rules that specifies what happens to real estate when you pass away.
In this blog, our experienced estate planning attorneys at Diamond Estate Planning Law discuss the ins and outs of including property in your estate plan, and what happens if you own property out of state.
What happens to my out-of-state property after I die?
In the United States, a dead person cannot own property – this includes your family home, vacation house, or any place of business you may own.
After you die, you must transfer your property to an inheritor via one of many methods.
If anyone else is a joint owner on the title of your property, they usually inherit your interest automatically upon your death.
If everyone on the title of the property has passed away, the default inheritance rules of the state where the property is located will apply.
In most states, if the last owner had a will, the will tells the executor or the estate what to do with the property.
But without an estate plan, your property may go to probate court. The probate court will decide where your properties go. In Illinois, if you don’t have a will this will frequently be a half interest to your surviving spouse, and a half interest to your children in equal shares.
If you want to avoid this, in most states, the best thing to do is to create a trust and put your vacation property into the trust. Property in a trust can usually be passed on to the people you choose without having to go through probate court.
Why should I put my vacation property in a trust?
There are a lot of other benefits to putting a property in a trust.
Essentially, a trust is an agreement for someone to hold property for someone else’s benefit under the terms of the person creating the trust (called the trustor).
Think of a trust like a suitcase. The trust agreement designates a person (called a trustee) to carry the suitcase, who then becomes in control of the things in the suitcase. The trustee is in control of the property in the suitcase but has to follow the instructions of the trust agreement regarding what to do with the things in the suitcase.
With a trust, you can specify many things about your vacation property, including:
- Who has access to the property,
- When they have access to it,
- What they can do with it,
- Who gets any rental income, and
- Who gets the money after it is sold.
If you want to make sure you choose what happens with your vacation home if something happens to you, the first step is to talk to an Illinois estate planning attorney.
Contact Diamond Estate Planning Law Today
If you live in Illinois but have property out of state, don’t fret. Diamond Estate Planning Law in McHenry has been helping Illinois families plan their legacies for decades, and we’re ready to get to work for yours next. Contact us today to get started.
DISCLAIMER: Any information contained herein is solely for informational purposes and is only applicable in the state of Illinois. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.