ESTATE PLANNING: Questions of residency

Q: My parents spend half of the year in Indiana and half of the year in Florida. If something happens to them, where do we open the estate? Do we have to open an estate in both states?

A: Residency is an important factor in estate administration. Since probate and estate administration is governed by state law, the rules and procedures can vary. Therefore it's important to determine where a person actually resides.

When determining residency, many factors need to be considered. I generally take the common sense approach. First, I would look to see if they spent most of their time in one of the states. For example, if they live in Indiana for the whole year except for the winter, that's pretty good evidence that they are Indiana residents.

If they truly split their time between two states, I'd look at where the decedent filed their income tax returns. If they filed Indiana state income tax returns, they are probably Indiana residents. You might also look to see what address they used on their federal returns.

If they own homes in both states, you could look to see which home they have filed a homestead exemption on. If they filed for a homestead exemption on one of their homes, I think that is a good indicator that they considered themselves residents of that state.

Like I said, there are a lot of things that can indicate residency. However, although you determine residency, that may not be the whole picture. In your parents' case, they may still need to open an estate in both Indiana and Florida.

If you own real estate in a state other than the one in which you reside, you may need to open an ancillary estate. An ancillary estate is essentially a probate estate that takes place in a state other than the decedent's home state. So, even if your parents are Indiana residents and open a probate estate in Indiana, an ancillary estate may need to be opened in Florida to transfer title to the home located there. Ancillary estate's can be expensive. You have to deal with two different courts and two attorneys.

I suggest that regardless of residency, you parents consider establishing a trust to hold title to their homes. A trust won't clear up the issue of residency, but it will likely solve the multiple probate issue.

Opinions are solely the writer's. Christopher W. Yugo is an Attorney in Crown Point Indiana. Address questions to Chris in care of The Times, 601 W. 45th Ave. , Munster , Indiana 46321 or to Chrisyugolaw@gmail.com. Chris' information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate–planning specialist.