A well-executed estate plan includes a complete set of documents to direct the distribution and administration of your assets and protect your loved ones from undue legal, tax and other burdens.
The documents can include your will, trust, power of attorney, advance healthcare directives, and more. These documents should be reviewed and updated regularly, especially as laws and life circumstances change, including relocating to a new state.
Although properly prepared estate documents may be valid in your new state, a thorough review can help to identify necessary revisions to confirm compliance—and the accurate fulfillment of your wishes.
Here are concrete actions you can take to help ensure your estate plan remains comprehensive and effective when moving across state lines.
H2: Evaluate Key Appointees
If your estate includes tangible property or real estate, you may want to designate a local executor and trustee so that distance won’t hinder their fulfillment of administrative duties.
Should you choose to keep an out-of-state appointee, make sure your executor meets the legal requirements to serve in your new domicile as:
- Several states only allow out-of-state executors who are related to the deceased by marriage, blood, or adoption
- Others require an out-of-state executor to appoint an in-state agent to accept legal documents
- Some states require the posting of an executioner bond
It’s also advisable to notify the agents for your powers of attorney of your move and confirm they are still able to execute decisions on your behalf.
States also have different rules for what constitutes a “resident trust, " subject to state income taxes. Many states may consider the domicile of the grantor (or creator of the trust), the trustee, and the beneficiaries when making this determination.
If you have a trust, speak with your financial advisor about the trust laws in your new state—and the benefits of enlisting an experienced professional trust company, such as National Advisors Trust whose national charter allows us to provide our expertise in all 50 states.
H2: Review Your Advance Healthcare Directives
Advance healthcare directives are legal instructions detailing your preferences for emergency and end-of-life medical care if you become physically or mentally incapacitated.
It’s important to determine if there are any new or different state requirements for these documents, such as the use of specific language or additional forms to complete.
Also, consider whether the person you’ve named as your healthcare proxy is still well-positioned to act quickly and effectively if you cannot make your own decisions.
H2: Address Discrepancies in State Property Laws
It’s essential to understand how property laws can affect your estate plan, particularly if you’re moving to or from a community property state.
In community property states, each spouse owns assets acquired during a marriage equally. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin currently recognize community property.
A surviving spouse in a community property state receives a complete (100%) step-up in basis, which resets the cost basis of an appreciated inherited asset to its fair market value. This is beneficial because it can reduce capital gains taxes.
However, in states that do not recognize community property, the surviving spouse is only entitled to a partial (50%) step-up at their spouse's death, which may result in an unanticipated capital gains tax liability.
Before you move, we recommend consulting with your advisor and attorneys to review the titling of your assets.
H2: Consider Potential Tax Implications
Tax planning strategies can help minimize the burden on your estate and preserve family wealth.
Currently, 12 states and Washington, DC, impose an estate tax on the overall value of your estate itself: Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. In addition, six states currently levy an inheritance tax on beneficiaries who receive assets: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Depending on where you move, estate and inheritance tax law could negatively impact the value of your estate—and the amount your loved ones will inherit—if you don’t update your will and trusts.
Your estate planning team can help you navigate the tax laws in your new home state and make any necessary updates to your documents to uphold your plan's original intentions.
H3: Establish Proof of Domicile
Moving is hectic, so important tasks can easily get lost in the mix. But it’s important to remember to legally declare your new state your permanent home.
Although you can have multiple residences, you risk legal and tax consequences if you don’t establish a singular domicile correctly.
State requirements vary and may include:
- Changing your address with the U.S. Postal Service, your bank, and other financial service providers
- Revising your driver’s license and passport
- Updating your voter registration
- Filing final and initial state income tax returns
By revising your estate planning documents to align with the laws of your new home state, you can further support the establishment of your new domicile while upholding the integrity of your plan.
H3: Ensure Your Estate Plan is Complete & Up to Date
Moving to a new state is one of many major life events that may require updates to your estate plan—including marriage, divorce, births, death, severe illness or injury, or a significant change in your assets and liabilities.
As the nation’s premier independent trust company, National Advisors Trust delivers complete trust services and education that empower advisors and families to preserve wealth and enrich future generations.
A client's financial advisor can help understand the potential impacts of the move, coordinate with estate attorneys, and update the plan accordingly. If you do not have an advisor, you can contact us about connecting with one of the 6,000+ advisors across our growing national network.
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