New York City is a melting pot of nationalities and transplants from all over the United States. So, it’s no surprise that residents often come to us with complex estate planning involving foreign property. (For purposes of this post, we use “foreign” to describe both out-of-state and international.)
Today, we’ll discuss some of the unique hurdles surrounding estate planning for New Yorkers with foreign property. Our hope is that, if you are one of the many transplants living in New York, we can clarify how you should approach your estate plan, and where you should look for an attorney.
Where’s Your Domicile?
At the outset, it’s important to understand that New York only has jurisdiction over the estate of a person domiciled in New York at the time of death.
Contrary to popular belief, your domicile has nothing to do with how long you’ve lived in a place. Domicile is legally defined as a person’s “fixed, permanent and principal home to which [he] always intends to return.” You’ll note that, under this definition, a person can have multiple residences, but he may only have one domicile.
As you can imagine, “fixed, permanent and principal” are squishy terms that have been the subject of much litigation. Especially because it’s difficult to determine the intent of a party now deceased.
Of course, the most common scenario we see is a lifelong New Yorker who passed in Florida, where he maintained a second home and spent much of his time before death. In this case, a close examination of the circumstances by a qualified New York attorney is necessary to determine which laws govern the estate.
Another common issue involves people who die in foreign nursing homes and long-term care facilities. This is somewhat unique to the tightly knit tri-state area, as many lifelong NYC residents choose facilities close to family in New Jersey or Connecticut.
Importantly, New York courts have found that decedents who spent as much as six years in a foreign facility can still claim a New York domicile! This very fact-specific, and the heirs would need to prove an intent to return to New York. Here again, you will need to consult qualified counsel.
Your Foreign Property
OK, so you’ve established domicile in New York. Will New York intestacy law, or New York laws governing Wills and Probate, control the disposition of your foreign real estate?
The short answer, with few exceptions, is no.
Whether you’re talking a country home in New England or England, the general rule is that the transfer of foreign real estate owned by a deceased New York resident is overseen by the state or country where the property is located. This is true whether or not a New York resident died with a Will.
So, when a New York resident dies owning foreign property, his heirs will need to start a proceeding in New York *and* an Ancillary Proceeding in the state or country where the property exists, just to claim that property. This usually requires hiring New York probate counsel *and* attorney in the jurisdiction where the property is located.
Aside from the obvious nuisances of extra costs and time, you might encounter other problems when probating in foreign states or counties like…
Forced heirship is a legal framework that prohibits a person from disinheriting certain kin, most commonly spouse, children, and grandchildren. It’s common in Europe, Japan, Russia, some Latin American countries, and many Muslim religious states.
Louisiana is the only U.S. state that uses forced heirship in a true sense. But, many states have enacted pieces of forced heirship into their laws. (We’ve previously written how New Yorkers may take a forced elective share of a spouse’s estate if they are excluded from a Will).
In the context of New York estate planning, it makes the most sense to talk about the U.S. Commonwealth of Puerto Rico. Puerto Rico has some of the most unique forced heirship laws in the world. And, it’s estimated that about one million Puerto Ricans live in New York, which is one-third the population of Puerto Rico itself.
Under Puerto Rican law, children, grandchildren and direct descendants cannot be disinherited. If the decedent did not have children, parents may become forced heirs. Oddly, spouses are not afforded forced heirship protections!
What does this mean for our purposes? For the many Puerto Ricans who live in New York and own even a share of land in Puerto Rico, a valid New York Will, prepared by a New York attorney and complying in all respects with New York laws, may still be disregarded by Puerto Rico if the testator didn’t leave that property to a protected heir.
Puerto Rico is only one example of a jurisdiction where a valid New York Will can run afoul of foreign probate laws. As stated above, many U.S. states have enacted elements of forced heirship, usually when it comes to spouses and minor children.
Therefore, it is imperative to consult New York estate planning counsel who can thoughtfully construct a Will that will stand up in New York and any other areas where you own property.
Or better yet…
Create a Trust
This is the solution to many of the problems of estate planning with foreign property. A Trust doesn’t have a domicile, so none of its property is “foreign,” per se. And, it doesn’t need the court to dispose of property.
A Trust is a private relationship that exists “above the law,” in some ways, and allows you to legally transfer domestic and foreign properties to whomever you please, however you please.
Indeed, if you’re one of the millions of New Yorkers who own foreign real estate or financial accounts, you might want to consider incorporating a Trust into your comprehensive estate plan. If done correctly, a Trust could save your heirs the costs and aggravations associated with proving domicile, opening probate in multiple jurisdictions, and fighting for what you intended to be theirs.
The information on this website is not legal advice. It is for information purposes only. No user of this site should act or refrain on the basis of this information without seeking legal counsel. This website does not create an attorney-client relationship. Photo credit: Shutterstock Photo ID: 1716630541