Posted On: OCTOBER 2024
Revisit your estate plan
If you recently relocated to a new state — or you’re planning such a move — it’s a good idea to review and update your estate plan. You won’t have to throw out your existing plan and start from scratch, but you may need to amend or replace certain documents to ensure that they comply with your new state’s laws and continue to meet your estateplanning objectives.
Here are some of the things you should consider as you reexamine your estate plan:
Will language and executor choice.So long as your will was properly drafted according to your previous state’s requirements, it generally will be accepted as valid in most other states. Nevertheless, it’s important to review your will’s terms to make sure it continues to reflect your wishes. For example, if you’re married and you move from a noncommunity property state to a community property state (or vice versa), your new state’s laws may change the way certain property is owned. If, for instance, separately owned property becomes jointly owned, you may need to update your will to ensure that it’s distributed in the way you intended.
Some states’ laws have provisions designed to protect your surviving spouse or children regardless of the terms of your estateplan. For example, state law may preserve family members’ interests in your primary residence, overriding any conflicting provisions in your will or trust.Or it may require a portion of your wealth to be used for “support” of your spouse or children. Be sure to determine whether your new state has such laws and, if so, evaluate their impact on your plan and adjust if appropriate.
Another important consideration is the person you named as executor. If your executor lives in your old state, you’ll need to find out whether he or she is qualified to serve in that capacity in your new state. Some states require executors to be residents of the state or to be related to you by blood or marriage. Many states permit out-of-state executors. However, they may impose additional requirements, such as posting a bond or appointing an in-state agent to accept service of legal documents on behalf of your estate.
Even if your existing executor is eligible to serve in your new state, for practical reasons it may be desirable to update your will to name a local executor.
Health care powers of attorney and advance directives. Many estate plans include advance medical directives or health care powers of attorney. Advance directives (often referred to as living wills) communicate your wishes regarding medical care (including life-prolonging procedures) in the event you become incapacitated. Health care powers of attorney appoint a trusted agent or proxy to act on your behalf. Often, the two are combined into a single document. Given the stakes involved, it’s critical to ensure that these documents will be accepted and followed by health care providers in your new state when the time comes.
Although some states’ laws expressly authorize out-of-state advance directives and powers of attorney, others are silent on the issue, creating uncertainty over whether they will be accepted. Regardless of the law in your new state, however, it’s a good idea to prepare and execute new ones. Most states have their own forms for these documents, with state-specific provisions and terminology. Health care providers in your new state will be familiar with these forms and may be more likely to accept them than out-of-state forms.
Financial powers of attorney. Like wills, out-of-state financial powers of attorney will be accepted as valid in most states. Still, to avoid questions and delays, it’s advisable to execute powers of attorney using your new state’s forms, since banks and other financial service providers will be familiar with them.
Trusts. Revocable and other trusts generally are valid in all states, regardless of where you signed them. As with wills, consideration should be given to such issues that include your new state’s laws and your choice of fiduciaries.
Beneficiary designations. These designations — for example, in life insurance policies, retirement accounts, payable on death accounts or transfer on death accounts — generally aren’t affected if you move to another state. But be sure the institution holding the asset has current contact information for you and your beneficiaries.
Review your plan periodically
Even if you’re not moving to a new state, you should review your estate planregularly to ensure that it continues to meet your needs.We can help you make any necessary revisions.
Domicile matters
If you move to a new state but retain some ties to your old state, it’s critical to determine where you’re domiciled. Your domicile is your permanent home to which you intend to return whenever absent, and you can only have one.
It’s significant because the state where you’re domiciled can apply its estate tax to all of your worldwide assets.Since domicile is a state of mind, however, it’s possible for more than one state to claim you as a domiciliary, which can result in double taxation.If you maintain residences or other ties to your old state, consider taking steps to establish your domicile in the new state, especially if the new state’s tax regime is more taxpayer friendly.
Actions you can take in the new state to demonstrate your intent to make it your domicile include:
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