The Beach House Problem: What Out-of-State Property Means for Your Estate Plan

Many of the families I work with own more than one home. A primary residence here in Fairfield County, and then the place everyone actually looks forward to: a beach house on Nantucket or the Vineyard, a cottage in the Hamptons, a condo in Florida for the winter months. These properties hold a family's best memories. They can also create some of the most avoidable complications in an estate plan.

If you own real estate in a state other than Connecticut, your plan needs to account for it directly. Two issues are at work, and they are easy to overlook because neither shows up until after death, when it is too late to fix.

Problem one: ancillary probate

Real estate is governed by the laws of the state where it sits, not the state where you live. So when someone who lives in Connecticut dies owning a house in Massachusetts, New York, or Florida, their will generally has to be probated twice: once in Connecticut, and again in each state where they held property.

That second proceeding is called ancillary probate, and it is exactly the kind of friction families do not anticipate. It means a second court process, often a second attorney licensed in that state, additional fees, additional delay, and a second set of records that becomes part of the public file. For a grieving family trying to settle an estate, discovering that the Nantucket house requires its own Massachusetts probate proceeding is an unwelcome surprise.

This is one of the clearest reasons a revocable living trust makes sense for anyone holding out-of-state real estate. When the property is titled in the name of your trust rather than in your individual name, it is no longer subject to probate in that state at all. The trustee simply administers it under the terms of the trust. One property, properly funded into the trust, can eliminate an entire ancillary proceeding. Several properties in several states can eliminate several of them.

Problem two: a patchwork of state estate taxes

The trust solves the probate problem cleanly. State estate tax is more nuanced, because owning property in another state can expose your estate to that state's death tax, and the thresholds vary dramatically.

The federal exemption is now $15 million per person for 2026, and Connecticut's matches it. But the states where your vacation home sits may be far less generous, and most of them tax nonresidents on real estate located within their borders.

Massachusetts is the sharpest example. The state exemption is just $2 million, and it operates as a cliff: once a taxable estate crosses $2 million, the tax is calculated on the entire estate, not merely the amount above the threshold. Massachusetts taxes nonresident-owned real estate located in the Commonwealth, prorated against the value of the whole estate. So a Connecticut family with a home on the Vineyard or the Cape can owe Massachusetts estate tax even though they owe nothing federally and nothing to Connecticut.

New York carries its own trap. The 2026 exemption is roughly $7.35 million, well below the federal figure, and New York imposes a notorious cliff of its own: an estate that exceeds the exemption by more than 5% loses the exemption entirely and is taxed from the first dollar. New York taxes nonresidents on New York real property, so a Hamptons house pulls a Connecticut decedent's estate into the New York system.

Florida, by contrast, has no state estate tax at all. A Florida condo creates no state-level death tax exposure, though it can still trigger ancillary probate if it is not held in trust.

Where the planning gets specific

Here is a detail that matters and that often surprises people: holding out-of-state real estate inside a single-member LLC can change the tax answer, but the states do not treat it the same way.

In New York, an interest in an LLC is generally treated as intangible property, which is not New York-situs property for a nonresident. Holding a Hamptons house in a properly structured LLC can therefore remove it from the nonresident's New York taxable estate. Massachusetts has taken a similar position for nonresidents holding real estate through a disregarded single-member LLC. But these techniques are fact-specific and easy to get wrong, and a structure that works in one state may do nothing in another. This is precisely the kind of analysis that should be done deliberately, with the particular property and the particular state in mind, rather than assumed.

The interaction between trust planning and LLC ownership also has to be coordinated. The goal is a plan where each property is held in the structure that both avoids ancillary probate and manages the relevant state's estate tax, working together rather than at cross purposes.

The takeaway

If you own a home outside Connecticut, two questions are worth asking about your current plan. First: is that property titled so that your family avoids a separate probate proceeding in that state? Second: does your plan account for that state's estate tax, which may apply at a far lower threshold than the federal or Connecticut exemption?

For most families with out-of-state property, a revocable trust is the foundation, and the right entity structure for each property is the refinement. Getting both right is the difference between a plan that looks complete and one that actually is.

I work with Connecticut and New York families on multi-state planning of exactly this kind. To review how your out-of-state property fits into your plan, you can schedule a planning session at here.