Own a Home in Another State? How Maryland Families Avoid a Second Probate

Plenty of Anne Arundel families own more than one place: a condo in Bethany Beach, a cabin in the Pennsylvania mountains, a winter place in Florida, or a parent's house in another state that passed to them. Most people assume their will takes care of all of it, and in one sense it does. A will says who gets each property. What it cannot do is move a property that sits in another state, because land answers to the law of the state it is in, not the state you live in. That gap is where families end up with a second probate they never saw coming.

When you die with a will, your personal representative opens your estate with the Register of Wills in your Maryland county, and Maryland probate typically runs nine to twelve months. That process can settle everything you own in Maryland. It cannot transfer the condo in Bethany Beach. For that, your personal representative has to open a second proceeding in Delaware, called ancillary probate, usually with a Delaware attorney, Delaware's court and filing fees, and Delaware's timeline running alongside Maryland's. Your estate isn't fully settled until every one of those proceedings is closed.

Some states add rules of their own. Florida, for example, lets someone who lives outside Florida serve as personal representative only if they are a close relative of the person who died, so the person you named in your will may not be allowed to act there at all.

One piece of good news for local families: Ocean City and Deep Creek Lake are still Maryland. A place there goes through the same Maryland probate as your home in Annapolis or Severna Park, with no second state involved. Rehoboth, Bethany, Lewes, and the Outer Banks are a different story.

Maryland is the only state with both an estate tax and an inheritance tax, and a property in another state touches each of them differently.

For the estate tax, the property in another state still counts when Maryland decides whether your estate is over its $5 million threshold. If it is, the tax Maryland charges is reduced in proportion to the share of your estate that sits outside Maryland. So a beach house can push an estate over the line even though Maryland then taxes only part of it.

Maryland's 10% inheritance tax works differently. It reaches only property with a taxable situs in Maryland, and land in another state has its situs there, so the Delaware condo is outside Maryland's inheritance tax no matter who inherits it.

Then there is the other state's own law. Delaware repealed its estate tax for deaths after 2017, and Florida has had no estate tax since 2005. Pennsylvania is the one to watch: it charges its own inheritance tax on Pennsylvania real estate even when the owner lived in Maryland, at 4.5% for children and grandchildren, 12% for brothers and sisters, and 15% for most others, with nothing owed by a surviving spouse. Holding the cabin in a trust does not change that, because Pennsylvania still taxes real estate held in a revocable trust. It is exactly the kind of detail a plan has to account for before it is signed, and it is why we review every plan against both of Maryland's taxes and the federal estate tax.

The tool that solves this for most families is a revocable living trust that owns the out-of-state property. When you die, your successor trustee takes over under the trust, not under a court order, and that works the same way in Delaware as it does in Maryland. No second probate opens, and your family can keep the property, rent it, or sell it on their own timeline.

The trust is written under Maryland law, but the deed that moves the condo into it has to follow the rules of the state where the condo sits, so we coordinate that deed with a local attorney or title company there. And don't overlook what's inside. If the deed moves but the furniture, the boat, and the golf cart don't, those can still need a probate of their own, so a complete plan assigns the contents to the trust as well.

There are other tools, each with limits. Joint ownership with a right of survivorship avoids the second probate when the first owner dies, but not when the survivor does, and it exposes the property to a co-owner's debts. Maryland's new transfer-on-death deed works only on Maryland land; whether one exists for your other property depends entirely on that state. For a rental property, holding it in an LLC can turn the property into an ownership interest that passes with the rest of your plan, though states differ on how they treat that interest for tax purposes. We walk through which of these fits your family in your Legacy Planning Session.

A couple we'll call Tom and Linda live in Arnold and bought a condo in Bethany Beach fifteen years ago, titled in both their names. With wills alone, the condo would pass to whichever of them survives, and when the survivor dies, their two children would go through probate in Anne Arundel County and then hire a Delaware attorney to open a second estate in Sussex County, just to sell a condo they both live hours away from.

Instead, Tom and Linda's trust now owns the condo, with the Delaware deed recorded through a local title company, and a short assignment moves the furniture and the kayaks into the trust along with it. When the time comes, their children will step in as trustees, keep the condo or sell it, and never set foot in a Delaware courtroom.

Does my Maryland will cover my house in another state? Your will still decides who inherits it, but a Maryland probate can't transfer land in another state. Your personal representative has to open a second proceeding there, called ancillary probate, usually with a local attorney and that state's court fees and timeline.

How do I avoid probate in two states? Have a revocable living trust own the out-of-state property, using a deed that follows that state's rules, and assign the property's contents to the trust as well. Your successor trustee can then manage or sell it without any court in either state.

Does Maryland estate tax apply to property I own in another state? It counts toward Maryland's $5 million estate tax threshold, but if tax is owed, Maryland reduces it in proportion to the share of the estate located outside Maryland. Maryland's 10% inheritance tax does not reach land in another state.

What about a place in Ocean City or at Deep Creek Lake? Both are in Maryland, so there is no second probate. The property goes through the same Maryland probate as the rest of your estate, unless your plan keeps it out of probate altogether.

Can a transfer-on-death deed solve this? Maryland's transfer-on-death deed applies only to Maryland land. Whether a similar deed exists for property in another state depends on that state's law, which is why a trust is the more reliable tool when you own property in more than one state.

If you own property outside Maryland, or expect to inherit some, the time to sort out which state's rules apply is now, while you can still choose. An introductory call is a conversation about your situation and what a complete plan would involve. Our fees are flat and agreed before any work begins, and most plans are complete within 4 to 6 weeks of your Legacy Planning Session. Call us at 410-570-1671 or schedule your introductory call. We serve Anne Arundel, Prince George's, Queen Anne's, Calvert, St. Mary's, and Kent Counties, in person or by video.