“State-by-state differences in matters around taxes, inheritance, marital property and more make a thorough review imperative.”
In the excitement of a move from one state to another, people often forget that their estate plan may need to also change with their address change. That is because each state has its own laws about estate planning, according to a recent article “Moving to a new state? If so, make sure those estate plans have been updated” from CNBC. Once you’ve moved to a new state, you’ll want to find a local estate planning attorney to help.
A surprising 4.7 million Americans moved out of their home states last year, and while they may have had checklists including the obvious—driver’s license, finding a physician, and a new barber—finding a new estate planning attorney to update their estate plan may not have been at the top of the list. Or even the middle.
Many think a will that worked in one state is automatically valid in another, but that may not be true. Other documents may not be valid, including power of attorney, living will or advance directive, health care proxy and any other estate planning documents. In general, states give full faith and credit to existing documents which were properly drafted in the original state.
Ye, the time immediately after a move is the right time to review documents for this reason: if your POA agent is now 1,400 miles away, is it realistic for that person to have that role? You probably need to think about someone else. The same especially goes for your healthcare Power of Attorney, approximately to you and your health care providers can be crucial.
Healthcare powers of attorney and other medical directives vary from state to state. What if the medical providers in your new state don’t recognize and won’t accept a medical POA from another state? Because they require witnesses. If your documents are not accepted, your agent may not be able to make the decisions you had empowered them to make. Your family may need to go to court to confirm the validity of your documents. That is not something you want to force upon your family during a health crisis.
Certain states do not allow non-residents to serve as executors. NY allows any 18 year old of sound mind who is a US citizen or if a non US citizen then they must be living in NY. Other states impose other restrictions, including requiring the non-resident to post a bond to protect your estate or appointing an in-state agent. This is in addition to the individual named in your will.
When people consider moving to another state, it’s often to lower their taxes. However, establishing a new state as your domicile and getting the tax benefit depends on many factors. Those factors include where you work, are registered to vote and what state issued your driver’s license. Also important is: the address on your estate planning documents. If your estate planning documents have your old address while you are trying to establish a new state of residence, you could run into an expensive tax snag.
Contact Grimaldi & Yeung LLP to find out how your assets are titled, including your trust assets. Certain types of titling are not different in many states. Community property, tenants by the entirety and joint tenancy, with or without right of survivorship, are all treated differently in different states.
Estate taxes also differ from state to state. While federal estate tax only applies to decedents with estates valued at more than $11.9 million individually (for 2021), state estate taxes, inheritance taxes and gift taxes may be imposed at the state level. Most states do not impose estate taxes on transfers between spouses, but you’ll want to be sure what your estate situation will be in your new state.
We can refer you to capable estate planning attorneys in your new home state to help you navigate the difference between your current estate plan and the one that will work in your new state.
Reference: CNBC (Dec. 14, 2020) “Moving to a new state? If so, make sure those estate plans have been updated”