Owning Real Estate in Multiple States: Why Your California Trust May Not Be Enough

The Multi-State Property Problem

California families often own property beyond state lines. A vacation cabin in Lake Tahoe's Nevada side. A rental property in Phoenix. A condo inherited from a parent in Oregon. A ski home in Park City. A beach house in Hawaii.

What most people don't realize: owning real estate in multiple states without proper planning creates one of the most expensive and time-consuming estate nightmares possible.

When a property owner dies, real estate must go through probate in the state where it's located—not where the owner lived. If you own property in three states, your family could face three separate probate proceedings, each with its own:

• Court filing fees
• Attorney fees (you need a lawyer licensed in each state)
• Timeline (6 months to 2+ years per state)
• Rules and procedures
• Tax requirements

As a Glendale estate planning attorney who serves families throughout Southern California, I regularly encounter clients who created a California living trust for their primary residence but forgot—or didn't know—to include out-of-state property. This guide explains the risks, the solutions, and the state-specific traps you need to watch for.

Understanding Ancillary Probate

What Is Ancillary Probate?

Ancillary probate is a secondary probate proceeding in a state where the deceased owned real property but did not reside. It's called "ancillary" because it's in addition to the "domiciliary" (primary) probate in the deceased's home state.

How Ancillary Probate Works

Step	Primary Probate (California)	Ancillary Probate (Other State)
1. Filing	File in county of residence	File in county where property sits
2. Attorney	California-licensed attorney	Attorney licensed in that state
3. Executor appointment	California court appoints	Other state court appoints (may require local co-executor)
4. Notice to creditors	California notice period	That state's notice period
5. Property handling	Managed per CA law	Managed per that state's law
6. Fees	CA statutory fees (Prob. Code §10810)	That state's fee structure
7. Timeline	9–18 months typical	Varies widely by state

Why Ancillary Probate Is Especially Costly

You pay twice (or more) for everything:

• Attorney fees: Each state requires a separately licensed attorney. California's statutory fee on a $1 million property is approximately $23,000. Arizona, Nevada, and other states have their own fee schedules.
• Executor/administrator fees: Many states allow executor compensation on the local property value.
• Court costs: Filing fees in each jurisdiction.
• Appraisal fees: Each state may require independent property appraisals.
• Travel and logistics: Your executor may need to appear in courts across multiple states.

States Where California Families Commonly Own Property

State	Common Property Type	Probate Complexity	State Estate Tax?
Arizona	Vacation/retirement homes	Moderate	No
Nevada	Lake Tahoe, Las Vegas	Moderate	No
Oregon	Vacation homes, inherited property	Complex	Yes ($1M exemption)
Washington	Investment property, inherited homes	Complex	Yes ($2.193M exemption)
Hawaii	Vacation condos	Complex	Yes ($5.49M exemption)
Utah	Ski properties	Moderate	No
Colorado	Ski/vacation homes	Moderate	No
Idaho	Vacation property	Moderate	No
Montana	Ranch/vacation property	Moderate	No
Texas	Investment/rental property	Complex (homestead laws)	No

How a California Living Trust Solves the Multi-State Problem

The Power of Revocable Living Trusts Across State Lines

A California revocable living trust is recognized in all 50 states. When real estate is properly deeded into the trust, it avoids probate in every state—not just California.

How It Works

1. You create a California living trust (or amend your existing one)
2. You deed each property into the trust in every state where you own real estate
3. When you die, no probate is needed in any state because the trust—not you personally—owns the property
4. Your successor trustee manages and distributes all properties under the trust terms

What "Properly Funded" Means for Out-of-State Property

The most common mistake: creating a trust but never transferring the property into it. An unfunded trust is useless. See our Living Trust Funding Guide for California Homeowners for detailed instructions on properly funding your trust.

For each out-of-state property, you must:

1. Prepare a new deed transferring the property from your individual name (or joint names) to the trust
2. Follow the deed requirements of that state (deed type, language, notarization)
3. Record the deed with the county recorder where the property is located
4. Update title insurance if applicable
5. Notify the mortgage lender if there's an outstanding loan (federal law protects transfers to revocable trusts from triggering due-on-sale clauses — see our guide on trusts for homeowners)

Deed Types by State

Different states use different deed types. Using the wrong form can cause recording rejections or title issues:

State	Typical Deed Type	Special Requirements
California	Grant deed	Documentary transfer tax (varies by county)
Arizona	Beneficiary deed or warranty deed	Affidavit of Property Value required
Nevada	Grant, bargain, and sale deed	Declaration of Value required
Oregon	Statutory warranty deed	Real Property Transfer form
Washington	Statutory warranty deed	Real Estate Excise Tax Affidavit (REETA)
Hawaii	Warranty deed	Conveyance tax certificate
Utah	Warranty deed	No transfer tax
Colorado	Bargain and sale deed	Documentary fee required
Texas	General warranty deed	No state transfer tax
Idaho	Warranty deed	No transfer tax

State-by-State Planning Considerations

Arizona

Why California families own here: Retirement properties, snowbird second homes, vacation rentals in Scottsdale, Sedona, and Tucson.

Key considerations:

• Arizona recognizes beneficiary deeds (transfer-on-death deeds)—a simpler alternative to trusts for single-property situations
• No state estate or inheritance tax
• Affidavit of Property Value required for all deed transfers
• Community property state (like California)—coordinate spousal ownership
• Arizona does NOT automatically reassess property tax upon transfer to a trust

Nevada

Why California families own here: Lake Tahoe properties (many with the Nevada side), Las Vegas investment properties, Reno-area homes.

Key considerations:

• No state estate, inheritance, or income tax
• Declaration of Value must accompany deed recordings
• Nevada also allows transfer-on-death deeds as an alternative
• For Lake Tahoe properties straddling the CA/NV border, confirm which state the property is in
• Nevada's probate threshold is $100,000 for personal property and any value for real property

Oregon

Why California families own here: Vacation properties along the coast, family homes in Portland area, farm/timberland.

Critical warning: Oregon has a state estate tax with only a $1 million exemption. This means:

• A California resident owning a $1.5 million Oregon beach house faces Oregon estate tax on the amount exceeding $1 million
• Oregon estate tax rates range from 10% to 16%
• A trust avoids Oregon probate but does NOT avoid Oregon estate tax
• Additional planning strategies (irrevocable trust, LLC) may be needed for high-value Oregon property

Washington

Why California families own here: Seattle-area real estate, San Juan Islands vacation homes, investment properties.

Critical warning: Washington has a state estate tax with a $2.193 million exemption (2026, indexed for inflation).

• Washington estate tax rates range from 10% to 20%
• Real Estate Excise Tax (REET) applies to most transfers, but trust transfers are generally exempt
• REETA form required for all deed recordings
• Washington is a community property state

Hawaii

Why California families own here: Vacation condos, timeshares, investment properties on Maui, Oahu, Big Island.

Key considerations:

• Hawaii has a state estate tax ($5.49 million exemption)
• Conveyance tax applies to property transfers (trust transfers may qualify for reduced rate)
• Hawaii HARPTA (similar to FIRPTA) may apply to non-resident sellers
• Timeshares require special trust transfer procedures

Property Tax Reassessment Risks

California (Proposition 19)

Under Proposition 19 (effective February 2021), when inherited property's use changes (e.g., parent's home to child's rental), it may be reassessed to current market value. This affects properties held in trust.

What to know:

• Parent-to-child transfers of a primary residence get a $1 million exemption from reassessment (assessed value, not market value)
• Other transfers (vacation homes, rentals) are fully reassessed
• Transfers between trusts and individuals during life generally don't trigger reassessment

Other States

State	Reassessment on Trust Transfer?	Reassessment on Inheritance?
Arizona	No	Limited
Nevada	No	No
Oregon	Generally no	Possible for value above current
Washington	No	No
Hawaii	No	No
Colorado	No (values assessed biennially regardless)	No
Utah	No	No

Alternative Strategies for Out-of-State Property

Transfer-on-Death Deeds (TOD Deeds / Beneficiary Deeds)

Some states allow you to record a deed that automatically transfers property to a named beneficiary at death—no probate needed.

States that allow TOD/beneficiary deeds: Arizona, Arkansas, Colorado, Hawaii, Illinois, Indiana, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

Notable exceptions: California did not allow TOD deeds for real property until recently (effective January 1, 2024, under SB 1305), and Texas uses a different "Lady Bird deed" structure.

Pros:

• Simple and inexpensive
• No trust needed
• Revocable during your lifetime

Cons:

• Only names one beneficiary (or set of beneficiaries)
• No management provisions if you become incapacitated
• No protection from beneficiary's creditors
• Doesn't work for every property type

Best for: Single properties in one other state when a trust isn't practical.

LLCs for Out-of-State Rental Properties

For investment/rental properties, holding title in an LLC provides:

• Asset protection (liability from the property stays in the LLC)
• Probate avoidance (LLC membership interest transfers, not the real estate itself)
• Management continuity (operating agreement governs transitions)
• Tax flexibility (single-member LLC is disregarded for tax purposes)

Structure: California LLC → owns out-of-state rental property → LLC membership interest is held in your living trust.

Caution:

• LLCs add annual compliance requirements (state registrations, fees)
• California charges an $800 annual minimum franchise tax per LLC
• Moving personal residences or vacation homes into LLCs can eliminate homestead protections and affect mortgage terms
• Lenders may object to LLC transfers of mortgaged property

Community Property Trusts in Non-CP States

If you own property in a common law state (e.g., Colorado, Oregon, Texas is CP), the property may not receive the full community property stepped-up basis at the first spouse's death. Consider:

• Keeping the property in a California community property trust for basis purposes
• Confirming the holding structure preserves community property character
• Consulting with a tax advisor about basis implications

Federal Tax Considerations for Multi-State Property

Stepped-Up Basis at Death

All real estate—regardless of state—receives a stepped-up basis to fair market value at the owner's death. This eliminates capital gains tax on appreciation during the owner's lifetime.

Example:

• You bought a Phoenix rental property for $300,000
• At your death, it's worth $750,000
• Your heirs' basis: $750,000 (not $300,000)
• They can sell for $750,000 with zero capital gains tax

This step-up applies whether the property is in a trust or not, but proper trust planning ensures the property doesn't go through probate to get to your heirs.

Estate Tax Considerations

All real estate counts toward your gross estate for federal estate tax purposes:

• Current exemption (2025): $13.99 million per person
• 2026 exemption (after TCJA sunset): ~$7 million per person
• Multi-state property owners with significant real estate portfolios should plan for the reduced exemption

See our 2026 Estate Tax Sunset Guide for detailed planning strategies.

1031 Exchanges and Trust Planning

If you use Section 1031 exchanges for investment properties:

• Properties acquired through 1031 exchanges can still be placed in a living trust
• The trust should be structured as a grantor trust to preserve exchange eligibility
• Timing of trust transfers after an exchange should be discussed with your tax advisor

Your Multi-State Property Planning Checklist

Immediate Actions

• Inventory all real estate you own in every state (including timeshares and partial interests)
• Check title for each property—is it in your name, joint names, or already in a trust?
• Review your existing trust to confirm it has language covering real property in other states
• Identify mortgage lenders for each property (transfers to revocable trusts are protected under the Garn-St Germain Act)

With Your Attorney

• Update or create your California living trust with multi-state property provisions
• Prepare deeds for each out-of-state property, using the correct deed form for that state
• Record deeds in each county where property is located
• Review state estate tax exposure if you own property in Oregon, Washington, Hawaii, or other taxed states
• Consider LLC structures for rental/investment properties

Ongoing Maintenance

• Review after every property purchase or sale
• Update trust if you acquire property in a new state
• Monitor state law changes (estate tax thresholds change annually)
• Verify title insurance lists the trust as insured
• Confirm homeowner's insurance reflects trust ownership

Frequently Asked Questions

What is ancillary probate and how does it affect out-of-state property?

Ancillary probate is a secondary probate proceeding required in each state where the deceased owned real property, in addition to the primary probate in their home state. If a California resident dies owning property in Arizona and Nevada, the family faces three separate probate proceedings—one in California (the domiciliary probate) and one in each state where property is located (ancillary probate). Each proceeding has its own court fees, attorney fees (you must hire attorneys licensed in each state), timelines, and procedural rules. The cost of ancillary probate often ranges from $10,000–$50,000 per state, depending on property value and complexity. A properly funded living trust eliminates the need for ancillary probate entirely.

Does my California living trust protect property I own in other states?

Yes, if the out-of-state property is properly transferred into the trust. A California living trust is recognized in all 50 states as a valid legal entity that can hold real property. When you deed your Arizona vacation home or Oregon rental property into your California trust, that property avoids probate in both California and the state where it is located. The critical step most people miss is actually recording a new deed transferring the property from your individual name (or joint names) into the trust's name in the county where the property sits. Simply having a trust document is not enough—you must fund the trust by changing title on each property.

Do I need a separate trust in each state where I own property?

No. A single California living trust can hold real estate in any and all states. You do not need to create separate trusts in Arizona, Nevada, Oregon, or any other state. However, you must properly deed each property into the trust following that state's specific recording requirements—including using the correct deed form, paying any required transfer taxes or filing fees, and submitting any required supplemental forms (such as Arizona's Affidavit of Property Value or Washington's Real Estate Excise Tax Affidavit). Working with a California attorney experienced in multi-state transfers ensures each deed is prepared correctly.

What happens if I own property in a state with its own estate or inheritance tax?

If you own real estate in a state that imposes its own estate or inheritance tax—such as Oregon (exemption: $1 million, rates 10–16%), Washington (exemption: $2.193 million, rates 10–20%), or Hawaii (exemption: $5.49 million)—that property may be subject to that state's tax even though California has no state estate tax. Each state taxes real property located within its borders regardless of where you live. This can create unexpected tax bills. For example, a California family owning a $2 million Oregon beach house could face approximately $146,000 in Oregon estate tax. Placing the property in a living trust avoids probate but does not avoid state estate tax. Additional planning strategies like irrevocable trusts or LLCs may help reduce state estate tax exposure.

Can I transfer out-of-state property into my trust without traveling to that state?

In most cases, yes. Your California estate planning attorney can prepare the deed transferring your out-of-state property into your trust. The deed must comply with the laws of the state where the property is located—including the correct deed form, proper legal description, and required notarization. Once prepared and notarized in California, the deed can be mailed to the county recorder's office in the other state for recording (most counties accept mailed recordings with the appropriate fees). A notarized deed prepared in California is generally valid for recording in other states, though some states have specific notarization requirements. Your attorney may coordinate with a local attorney in the other state if needed for complex transfers.

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Protect All Your Property—In Every State

Whether you own a vacation home in Sedona, a rental in Portland, or a ski condo in Park City, proper planning ensures your family inherits smoothly—without multiple probate proceedings across state lines.

We help California families with:

• Multi-state living trust creation and updates
• Out-of-state property deed preparation and recording
• Ancillary probate avoidance strategies
• State estate tax analysis (Oregon, Washington, Hawaii, and others)
• LLC structures for investment properties
• Coordination with out-of-state attorneys when needed

Don't let out-of-state property become a probate nightmare for your family. Call (818) 291-6217 or visit our contact page to schedule a consultation.

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About the Author

Rozsa Gyene (State Bar No. 208356) is a California estate planning and trust administration attorney serving families throughout Los Angeles and Santa Barbara Counties. With extensive experience in multi-state property planning and trust funding, Rozsa helps California families ensure every asset—regardless of location—is properly protected.

Office Location: 450 N Brand Blvd, Suite 600, Glendale, CA 91203

Phone: (818) 291-6217

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Disclaimer: This article provides general information about multi-state real estate planning and should not be construed as legal or tax advice. Each state has unique laws governing property transfers, probate, and taxation. This article reflects information current as of February 2026. Consult with qualified legal and tax professionals about your specific circumstances before transferring property or implementing estate planning strategies.

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