Every year, thousands of Colorado households trade snow shovels for patio furniture. According to U.S. Census Bureau figures for 2024, about 10,300 people moved from Colorado to Arizona, making it the third most common destination for Coloradans leaving the state, behind Texas and California.
Many of those moves are not clean breaks. Some owners sell the Front Range house and buy in Arizona. Others keep the Colorado home for family visits or as a rental while they try out life in Tucson or Scottsdale. The second path quietly creates an estate question that a lot of families only discover after a death: what happens to a house in one state when its owner lives, and dies, in another?
Why Two Homes Can Mean Two Probates
Real estate is governed by the law of the state where it sits, not the state where the owner lives. If you live in Arizona and die owning a house in Colorado in your own name, your family may need to open a probate case in Arizona and a second one, known as ancillary probate, in Colorado to transfer or sell that property.
Ancillary probate is not a disaster, but it adds time, legal fees and paperwork in a second jurisdiction, often while the house sits empty and still needs insurance, utilities and upkeep. For heirs who live in a third state, managing all of that from a distance can be the hardest part.
Tools That Can Keep a Home Out of Probate
The good news is that both states give homeowners practical options. Which one fits depends on your family, your other assets and the advice of an attorney licensed where the property is located.
Beneficiary deeds. Colorado (C.R.S. 15-15-401 and following) and Arizona (A.R.S. 33-405) both allow an owner to record a beneficiary deed that transfers the property to a named person at death. The owner keeps full control during life and can revoke the deed. In both states, the deed has to be recorded with the county where the property is located before the owner dies. An unrecorded deed found in a drawer does not do the job.
A revocable living trust. Retitling both homes into a single trust lets one document govern property in two states, and a successor trustee can usually manage or sell the homes without a court case. Trusts take more effort to set up and only work for assets that are actually transferred into them.
Joint ownership with right of survivorship. Common for married couples, and simple, but it only postpones the question until the second owner dies. It can also create problems when an adult child is added to the title.
Whichever route you choose, remember that a beneficiary deed or a trust controls that property regardless of what your will says. Good estate planning for a two-state household starts with a simple inventory: every property, how it is titled, and who is named on every deed, account and policy.
Tax Questions to Settle Before You List
Under the IRS home sale exclusion, a single filer can generally exclude up to $250,000 of gain on the sale of a main home, and a married couple filing jointly up to $500,000, if they owned and lived in the home for at least two of the five years before the sale.
That five-year window matters if you plan to keep the Colorado house as a rental and sell later. Once more than three years have passed since you last lived there, the use test can no longer be met. Talk to a tax professional before deciding how long to hold.
There is also a reason some families keep a property rather than sell it late in life. Under IRS rules, heirs generally receive inherited property with a basis equal to its fair market value on the date of death, which can reduce the tax due when they sell. Whether that outweighs the cost and work of keeping a second home is a family decision, not a default.
Update the Paperwork When You Change States
Moving your primary residence affects more than your deed. Wills, powers of attorney and health care directives were drafted under one state’s law. They are often honored elsewhere, but it is worth having an attorney in your new state review them. Beneficiary designations on retirement accounts and life insurance also deserve a fresh look, because those assets go to the people named on the form, whatever your will says.
For many families, the financial side of a move is where things slip. Investment accounts, home sale proceeds and new property are often handled by different people at different times. On the Arizona side, fiduciary advisory firms such as Ironwood Financial in Tucson coordinate with a client’s estate attorney rather than replace one, checking that account titling and beneficiaries match the plan after a relocation. Whoever you work with, the goal is one picture of your assets, not two separate ones.
A Short Checklist for Two-State Owners
- List every property and how it is titled today.
- Ask an attorney in each state whether a beneficiary deed or a trust fits your situation, and record any deed before you need it.
- Check the two-of-five-year rule before you turn your old home into a rental.
- Review beneficiary designations on every account after the move.
- Tell your heirs where the documents are.
A move to the desert should be the start of a simpler life. A few hours of planning now can keep it that way for the people who come after you.
This article is for general information only and is not legal, tax or investment advice. Rules vary by state and by individual situation, so consult a licensed attorney and tax professional before making decisions.