For many Americans, building wealth includes owning property—sometimes in more than one state. A vacation home in Colorado, an investment property in Florida, or farmland inherited in Missouri can all be valuable parts of your portfolio. But when it comes to estate planning, these out-of-state properties can create unexpected complications, particularly when it comes to estate taxes and probate.
Why State Lines Matter for Estate Taxes
When you pass away, your estate may be subject to federal estate taxes if it exceeds a certain threshold—currently $13.61 million in 2025. But what many people overlook is the state-level estate or inheritance taxes, which vary widely from one state to another and often have much lower exemption thresholds.
If you own property in a state that imposes its own estate or inheritance tax, your heirs may face tax bills even if you live in a state without such taxes. For example:
- Massachusetts and Oregon tax estates starting at just $1 million.
- Maryland is unique in levying both an estate tax and an inheritance tax.
- New Jersey, while it repealed its estate tax, still enforces an inheritance tax depending on the heir’s relationship to the deceased.
So, even if you live in a tax-friendly state like Florida or Texas, owning property in a state like New York or Minnesota can open your estate up to additional taxation.
The Probate Problem: Multiple States, Multiple Headaches
Taxes aren’t the only issue. If you own real estate in another state, your estate will likely be subject to ancillary probate in that state. That means your executor or family must go through separate probate proceedings in each state where you own property—adding legal fees, delays, and administrative burdens.
In states with especially complex or slow probate systems, this can significantly slow down the transfer of property and may even lead to conflicts among beneficiaries.
What You Can Do About It
The good news? With proper planning, you can minimize—or even eliminate—these problems.
Here are a few strategies to consider:
- Create a Revocable Living Trust: Transferring property into a trust can help avoid probate entirely, even across state lines.
- Consult with an Estate Planning Attorney: Especially one with multi-state experience who can help you anticipate tax exposure and structure your estate efficiently.
- Review Your Property Titles: Titling property correctly (such as joint tenancy or in a trust) can simplify the legal process and help avoid probate.
Consider Gifting Strategies: In some cases, transferring property during your lifetime may help reduce the size of your taxable estate and simplify asset distribution.
Plan Now to Protect Your Legacy Later
At Market Advisory Group, we understand how complex estate planning can become—especially when real estate is involved. If you or your loved ones own property in more than one state, it’s important to take proactive steps to ensure your estate is protected from unnecessary taxes, delays, and legal headaches.
Our team of estate planning professionals is here to guide you through the process, offering personalized solutions that safeguard your assets and simplify the legacy you leave behind.
The commentary on this blog reflects the personal opinions, viewpoints, and analyses of the author, Katherine Sullivan. Katherine Sullivan is not an investment adviser representative of Foundations. However, Foundations does have an investment adviser representative at Market Advisory Group. This content should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), nor as a reflection of the performance returns of any Foundations client.
The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.