If You Recently Moved, You Should Update Your Estate Plan
If you’re planning a move – or have recently done so – you likely have a lot on your mind, whether its packing and unpacking, purchasing furniture, or finding a new plumber. One thing you should not let fall through the cracks is your estate plan.
Like other major life changes —the birth of a child, a divorce, or a partner’s death — a move to another state, or in some cases, even within the same state, may require you to revisit your estate plan. Don’t worry: we’re not talking a total re-do. But it will be important to ensure the plan you do have is updated to avoid unnecessary problems later.
Laws differ from state to state
While many states will likely recognize the legality of an estate plan prepared in another state, there are subtle but important differences in forms, laws and more that can prevent your estate plan from being recognized as valid – and which could potentially land your loved ones in probate.
That’s why it’s important to consult with an estate planning attorney who can decipher those subtleties and help you revise your estate plan. Those revisions also apply to advance directives, power of attorney and other components of an estate plan, including a health care proxy and wills and trusts. For example, one thing to consider is whether your chosen executor can serve in that capacity in your new state. Although most states allow out-of-state executors, they may have special requirements or provisions that you’ll need to know about ahead of time.
Estate taxes
If you have moved from one state to another recently, estate tax planning is important as inheritance taxes and laws vary from state-to-state. For this reason, it makes sense to review your existing estate plan with an attorney in your new state who is familiar with local laws.
Even if you have not moved to a new state, it makes sense to touch base with your attorney periodically on changes to tax law to ensure your plan is compliant.
Another piece of the puzzle that can impact your estate taxes is a major change in your assets – which could be the case when you move. Whether you’ve bought a larger home, or downsized, or simply moved to a different part of the country with different economics, your asset picture may have changed and your estate plan – and tax strategies – should take that into account.
Additionally, not updating your estate plan with your new address could make your estate taxable in a state where you no longer live.
Put your assets in a trust
While we recommend you review and amend your estate plan if you move to another state, we can’t stress enough that you should also consider adding your newly purchased home to a trust. That way, you still maintain ownership of the home.
However, when you die, your home then becomes property of your appointed beneficiary. The trust will eliminate the probate process, and your assets will be distributed as you wish; you will reduce the estate’s taxes; and your property can be safe from creditors.
And consult an estate planning attorney who understands the nuances of the Garn-St. Germain Depository Act. Passed by Congress in 1982, St. Germain prevents banks and mortgage lenders from foreclosing on a home or collecting the entirety of the mortgage balance upon the transfer of ownership when that transfer does not include a financial transaction – like when the homeowner transfers the house to a trust or dies.
Consider community property
If you are married, you’ll want to understand how your new state treats marital property. In a community property state, all marital property is considered to be jointly owned, whereas common law states treat property in one spouse’s name as belonging to them only. If you are moving to a community property state and you had previously lived in a common-law state (or vice versa), the designations you’ve made in your will may not work the way you expect them to.
Consult with an estate planning attorney
Your move is a great time to revisit your estate plan and ensure that everything is in order. Even if you don’t think state laws will affect your current plan, updating names, numbers, and all relevant property and individuals in your plan is a must and will save your loved ones a lot of problems later.
A knowledgeable estate planning attorney can guide you through all of the considerations you need to make when updating your estate plan. Contact Ladimer Law Office at 508-532-8969 to learn more about estate planning and schedule an appointment.
And if you haven’t yet put an estate plan together, consider our Wills in a Week® program which will save you time and money and walk you through the process in less than five business days. Learn more and sign up here.
Julie Ladimer is the founder of Ladimer Law. She has been helping people complete their estate planning since 2009 and founded the firm in 2014. She has been named a Rising Star by Super Lawyers three years running and received a Boston Magazine Five Star Professional award.