Moving To A New State? Update Your Estate Plan

Each state governs estate planning differently and has varied rules regarding property transfers and ownership, which can affect how individuals structure their legacy plans. Because of this, amending existing estate planning documentation is vital to ensure effective asset distribution and protection and appointment of appropriate decision-makers when moving across states. In this blog post, we’ll talk about the the importance of updating an estate plan when moving to a new state.

What Are Estate Planning Documents?

The Department of the Interior (DOI) stipulates that estate planning entails creating various legal documents, including trusts, wills, and powers of attorney, outlining an individual’s wishes concerning their assets, dependents, and other financial or personal matters in the event of their incapacitation or death. Wills are typically the core and most common legacy planning document, stating what happens to a person’s assets and dependents upon their death. Trusts, which are legal mechanisms holding assets separately from the owner to benefit the trust’s beneficiaries and managed by a trustee, are other popular estate planning tools.

When individuals move to a different state or experience any major life event, they may wish to revise their wills, trusts, and other estate planning documentation. These additional documents may include powers of attorney, healthcare directives, beneficiary designations, funeral instructions, and HIPAA authorizations.

Why Is It Important To Update Estate Planning Documents After a Move?

Per the American College of Trust and Estate Counsel (ACTEC), amending estate planning documents following a move to a different state is important since each state’s laws concerning estate taxes, wills, and trusts vary. By reviewing and updating these documents, ideally prior to the move or at least after the person finishes moving, individuals can make sure they abide by the state’s regulations and have a legacy plan that accurately reflects their wishes. Additionally, some states have different tax levels; changing estate planning documents to reflect the person’s new state can help demonstrate an intention to make this state their new permanent home, which can be useful for minimizing income tax obligations.

Another example of why updating legacy estate planning documents is vital following a move to another state relates to powers of attorney and healthcare directives. While financial institutions and hospitals usually honor these legal mechanisms from other states, they typically review them first, subjecting them to high levels of scrutiny, which can cause delays in their implementation; to avoid this issue, the recommended approach is to create new healthcare directives and powers of attorney in the new state. States also have varied views regarding the treatment of marital property, which is why individuals may want to consider changing their legacy plan following an interstate move.

How Moving to a New State Affects an Estate Plan

Moving to other states brings about various consequences for legacy planning, such as different wills and trusts requirements, varied probate procedures, tax impacts, and property ownership differences. Below is an explanation of these implications.

Trusts and Wills

State laws govern trusts and wills, and the requirements for these legal mechanisms vary between locations. For instance, certain states may require different numbers of individuals to witness the signing of a will compared to others. Moreover, some states consider unwitnessed and handwritten wills as valid, whereas others do not, and the rules associated with managing and creating trusts can change across states.

Probate Process

Probate refers to the legal process related to the settling of a deceased individual’s estate. Different states have varied approaches to this procedure; some have streamlined probate processes that simplify the settling of smaller estates, whereas others have lengthy and more complex processes. Understanding these differences can help individuals choose the appropriate legal language for their legacy planning documents to handle probate effectively.

Understand the importance of updating an estate plan after moving to a new state in greater detail, and find out how Rhodium Law, LLC might help individuals conduct effective legacy planning. Get in touch with our team today to discuss any queries with a seasoned Cleveland estate planning attorney.

Property Ownership

In terms of marital property, the ownership and transfer of these assets is subject to the laws of the state. Two key systems exist, including community property states and common law states. In community property states, both spouses equally own all assets acquired while married irrespective of who obtained it, meaning each spouse can expect to receive half of all these assets following a divorce; by contrast, in common law states, whoever holds the title to the property owns the asset or, if no title exists, whoever bought the property owns it, and since property distribution takes place based on ownership, an equal split of the assets might not always transpire in the event of a divorce or spousal death.

Tax Consequences

Tax laws impact legacy planning, and these rules change across states. For example, inheritance taxes can vary between states, impacting asset distribution to heirs, and some states collect their own estate tax alongside federal estate tax. On top of this, state taxes on business income, real estate, personal income, and property can differ.

How To Update an Estate Plan When Moving to a New State

By following a few steps, it is possible to keep a legacy plan updated and legally sound when moving states. These measures are as follows:

• Review current documentation: Check over any existing legacy planning documents, such as wills, health care directives, powers of attorney, and trusts, and make a note of the documentation to amend based on the laws of the new state.
• Update trusts and wills: Be sure any trusts and wills comply with the new state’s laws, such as signing the documents again but with the correct number of witnesses and accounting for location-specific legal differences in terms of asset distribution. Also, be sure the selected executor/trustee can act in that role in the new state (some states require executors from other states to post bond or appoint an agent based in the new state), and take into account the state’s requirements regarding who to notify about a trust and its assets and the method of notification, as well as whether the move subjects the trust to different tax obligations.
• Edit health care directives: Revise any health care directives to reflect the requirements of the new state; for instance, updating the contact details for the nominated healthcare proxy or editing the directive to abide by the state’s laws. Individuals may also want to think about choosing a new proxy that lives closer to their new address so they can quickly perform their role during an emergency.
• Revise powers of attorney: Ensure the wording of any powers of attorney aligns with the new state’s requirements so any nominated agents can effectively manage the person’s affairs in the event of their incapacitation; this process may also involve choosing a new agent who is geographically closer.
• Change beneficiary designation details: Pension, retirement, pay-on-death, or transfer-on-death accounts, as well as insurance policies, have named beneficiaries who receive these funds after the person named on these documents passes away. Updating this information is not usually necessary following an interstate move, but the recommended approach is to check all contact information on these accounts reflects the new address to avoid complications.
• Inform executors and beneficiaries: Make sure to tell the executors and beneficiaries of any updates to the legacy plan, and give them new copies of estate planning documents to avoid confusion and ensure the following of the deceased individual’s wishes.

Speak to an Ohio Estate Planning Lawyer To Find Out More

To ensure the following of their wishes after they pass away or become incapacitated, individuals may want to consider updating their legacy plans to reflect the different rules in that location, which can be a complicated and daunting procedure. This involves understanding state laws, updating trusts and wills, reviewing powers of attorney and healthcare directives, thinking about tax implications, and amending executor designations.

Gain a more detailed understanding of what to amend in an estate plan when moving to a new state, and learn how an Ohio estate planning lawyer can aid those with estate planning queries; contact Rhodium Law, LLC to book a consultation by calling (216) 699-8145.