October 6th, 2017

Ancillary Administration and the Case of the Snowbird

So, what is ancillary administration?  Well, let’s take the case of the proverbial Snowbird.  He lives in Pennsylvania, is a registered voter in Pennsylvania, and is a Pennsylvania licensed driver. In legal parlance, our Snowbird  is domiciled in Pennsylvania. So, when he dies, estate administration is created in the county and in the state where our Snowbird is domiciled. Now, our Snowbird owns a vacation home in the State of Florida and, as a convenience, keeps a checking/savings account totaling $20,000.00 with a bank that is located near the vacation home in Florida.  So, the Snowbird’s Will is probated in Pennsylvania – the state of his domicile – but the authority of a personal representative does not extend beyond state lines. The question then becomes: What does the personal representative do with the real estate and bank account in Florida?

The answer is ancillary administration, a process by which most states offer a mechanism under which assets located in a state other than the state of domicile can be administered. Sounds easy, but in some states it can be a complicated process. For example, is there a Pennsylvania Inheritance Tax on the real estate owned by the Snowbird in Florida? The answer is no. How about the bank account? The answer is yes, as that account will be taxable under the Pennsylvania Inheritance Tax Act. And do not forget, Snowbird may owe some debts that were created in Florida. How those debts are presented for payment to the personal representative of the estate functioning as an ancillary administrator in another state will be very much statute specific. How about state income taxes? It depends. So, Mr. Snowbird buy that vacation home in the State of Florida, but watch out for the hurricanes.

Attorney Victor Cavacini provides estate planning and administration services to families in and around the Lehigh Valley region.