You live in California. You also own a place in Havasu, a couple of rentals in Ohio, maybe something in Michigan that a partner found for you. Your trust was drafted here. The question nobody answers clearly is whether that California document reaches property sitting 2,000 miles away. Jason Gaudy, an estate planning attorney at Gaudy Law in Upland, California, gets this one often, because a lot of real estate investors do own in more than one state.
What is ancillary probate?
Start with the risk, because it is the thing the structure exists to avoid.
Probate is the court-supervised process for transferring what someone owned after they die. The catch is that real estate is governed by the courts of the state where the dirt is. So if you die owning property in your own name in another state, your home-state probate cannot reach it. Your family opens a second probate, in that second state, with that state’s courts, that state’s timelines, and that state’s fees. That second case is called an ancillary probate.
It is the same expense and delay as the first probate, duplicated, in a place where nobody in your family knows a lawyer. Own in three states and you can end up with three cases.
Gaudy’s framing is the useful one: if the trust can administer the property when you die, you are done. If it cannot, he says, you will have to do an ancillary probate in that other state. For what a single probate costs and how long it runs, see probate vs. trust and what it really costs.
Can a California trust own property in Arizona or Ohio?
Yes. This is the part that surprises people, and Gaudy states it plainly: the California trust can own the Arizona property, and the California trust can own the property over in Ohio or Michigan or wherever. One trust, one plan, properties in several states.
He is licensed only in California, and says so directly. That does not stop the trust from holding out-of-state real estate. What it means practically is that the deed work has to be done correctly under the other state’s rules, so when his firm handles a transfer like this, they find local counsel in those states to do that piece.
That is the coordination most people miss. The trust document is home-state. The deeds are wherever the property is. Both have to line up, or the trust owns something on paper that the county recorder in Maricopa County has never heard of.
Where LLCs fit in a multi-state portfolio
For investment property, Gaudy’s usual recommendation adds a layer: the LLC owns the real estate, and the trust owns the LLC.
Typically he forms a California LLC, sometimes a Nevada LLC depending on the variables in a given case. He is candid about the California cost (the $800 annual franchise tax, which he shrugs off as institutional and simply the price of doing business) and equally candid about why he keeps using it. It is simple, and it is essentially designed to hold real property.
His illustration is a client he had just worked with: multiple LLCs across multiple states, with the California trust owning all of them. That is the shape of a coordinated plan. Each property sits inside an entity that absorbs its own liability. Every entity rolls up into one trust, which is the thing that avoids probate for all of them, everywhere.
His general position: if you own real estate beyond your primary residence, he is a big fan of using LLCs to protect it. The full trust-over-LLC structure is worth understanding before you form anything.
Why don’t more investors do this?
Because it has real friction, and Gaudy does not pretend otherwise. There is a cost, and there is administration. Each LLC needs its own tax ID number. Each one needs its own bank account. Multiply that across four states and it stops being a weekend project.
Which is exactly why he sees so many entities that exist in name only: formed online, never used, with no property transferred in and no contracts written in the LLC’s name. His assessment of those is unsentimental: it is just sitting there making the owner feel good.
He adds a detail worth knowing before you reach for a filing service. If you actually complete the online version and pay for all the services it upsells, the total lands pretty close to what an attorney would have charged. Not exactly, he says, but close.
What this means if you’re planning a 1031 exchange
Exchanging out of state is common. Investors sell an expensive California rental and buy where the numbers work better. It also quietly creates the ancillary probate exposure described above, because you now own real estate in a state whose courts your home-state documents do not control. Two practical consequences. First, the vesting on the replacement property has to satisfy both the exchange rules and your estate plan, and those get decided in the same escrow. Second, some investors choose replacement property that avoids direct out-of-state deed ownership entirely; our guide to DSTs explains how a fractional interest is held and what that changes about titling. Neither path is automatically better, but the estate side should be part of the decision, not a cleanup item afterward.
Watch: How to Hold Real Estate in Multiple States with Jason Gaudy, Gaudy Law
Educational only. Not legal, tax, or investment advice. Jason Gaudy is licensed in California; rules vary by state. Consult your own advisors.