Summer is a time of year many of us travel to enjoy time off at a vacation home. Perhaps you live in Chicago and own a lake house in Michigan. How does estate planning for your out-of-state vacation home differ from your Illinois property? Many people don’t realize that real estate is governed by the laws of the state where it is located—not where the owner resides. As a result, if you pass away owning out-of-state property, your family may need to open a second probate case in that other state to transfer ownership. This is known as ancillary probate, and it often adds significant time, expense, and legal complexity. A revocable living trust is the most common method used to avoid this second probate.
When properly drafted and funded, a trust can eliminate the need for probate entirely, both in Illinois and in other states where you own real estate.
To better understand how this works—and what can happen when there is no plan in place—consider the following example, the planning options available, and the pros and cons of each.
As with all content on this website, this post is informational in nature, and is not to be relied upon as legal advice. Consult an attorney for counsel relevant to your circumstances.
A Common Scenario: The Paleys
Samuel and Ethel Paley are in their late 60s and live on the North Shore. They have two grown sons and three grandchildren. Their estate includes:
- Their Illinois home, valued at approximately $750,000
- Retirement accounts, savings, and investments that bring their total Illinois estate to around $2 million
- A Michigan vacation home on the eastern shore of Lake Michigan with a market value of $1.5M, which they use a few weeks each year and rent out the rest of the time
They would like their estate to pass to the surviving spouse and then be divided equally between their two sons.
At first glance, this seems straightforward. But without proper planning, their family could be left managing two separate probate cases—one in Illinois and another in Michigan—along with all the delays, legal fees, and potential disputes that can arise.
Option 1: A Revocable Living Trust
By creating a revocable living trust, Samuel and Ethel can avoid probate in both states and ensure their estate is administered efficiently and privately. Here’s how it works:
- They transfer title to both their Illinois residence and their Michigan vacation home into the trust.
- Their trust names each other as initial trustees and beneficiaries, with their sons as successor beneficiaries after both parents pass.
- Other assets—such as bank accounts, investment accounts, and business interests—can also be transferred into the trust or designated to pass through it.
Upon death, the trust continues without interruption. There is no need for probate in Illinois or in Michigan, because the trust—not the individual—owns the real estate.
This approach offers significant advantages:
- Avoiding multiple court proceedings (no probate in either state)
- Continuity of management if one spouse becomes incapacitated
- Privacy (trusts are not public like probate filings)
- Flexibility to tailor distributions, including holding assets in trust for grandchildren if desired
Option 2: Relying on a Will
If Samuel and Ethel rely solely on a will, their estate would go through probate in Illinois. Worse, their Michigan property would trigger ancillary probate—a separate legal proceeding under Michigan law just to transfer that real estate.
Ancillary probate typically requires hiring a Michigan attorney, filing documents with the local court, and potentially dealing with different deadlines, procedures, and costs. This can delay distribution of assets, increase stress for the family, and lead to avoidable expenses.
A will is certainly better than no plan at all—but for families with out-of-state property, it falls short.
Option 3: No Estate Plan
If Samuel and Ethel pass away without any estate planning documents, the estate would be administered according to Illinois intestacy law. This means:
- The court—not the family—determines how assets are distributed
- The estate would go through probate in Illinois
- The Michigan vacation home would require a second, ancillary probate
- There would be no clear legal authority to manage the Michigan rental property if either spouse becomes incapacitated
In short, failing to plan can lead to court involvement, delays, higher costs, and outcomes that may not reflect the family’s wishes.
Conclusion
If you own property in more than one state, your خطة عقارية must account for it. A revocable living trust is often the most effective way to avoid probate, reduce burdens on your loved ones, and ensure a smooth transition of your assets.
Whether you’re managing a vacation home, an investment property, or simply planning for the future, thoughtful estate planning can make a meaningful difference.
بالي لو تدعوكم للاستشارة
Contact Palley Law to schedule a consultation and find out how a revocable trust can account for a second home. Palley Law provides prospective clients with an initial consultation at no charge.
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