state specific estate planning laws
LexInter | April 9, 2021 | 0 Comments

State Specific Estate Planning Laws

Nearly everyone has an estate – your home, car, furniture, investments. Insurances and so on – everything you own. Estate planning is complex and state specific estate planning laws can make it more complex as nothing is set in stone and the details can vary from state to state.

If you have an estate it is your duty to deal with your assets and see that they are all distributed the way you want. To do this properly you will need a will so that you can control how your assets are given to the people you care about.

To ensure that your instructions are carried out, estate planning comes into action – making a plan in advance.

State Specific Estate Planning Laws Can Differ

State Specific Estate Planning Laws Can Differ

State specific estate planning laws differ when it comes to estate and inheritance taxes, the rights of children to inherit, and the property rights of spouses. In fact, with each state, these laws can fall under various names or codes.

The different estate and probate codes include Decedents’ Estates, Estate Administration, Uniform Probate Code, and Trust and Fiduciaries. Code. There are a number of states that adhere to the Uniform Probate Code that represents an all-inclusive standard that is designed to simplify understanding how the probate process works. It encourages similarity of laws among the different states.

There are some people who are retired and who split their time between two states. Then they need to be aware of certain state specific estate planning laws. Legally, it isn’t required for you to have separate estate planning documents for each state, but for some people, it can make sense.

The Constitution of the United States requires that states have respect for state specific estate planning laws and this means that your will for instance, which may have been executed in one state should be honored in another state.

Some People Can’t Comprehend The Same Forms But Different Terms

However, while you won’t need a separate will for a second state, your power of attorney may be something different. Financial and health care institutions are familiar with- and used to the documents used in their states and they may refuse to honor out-of-state documents.

People in these positions often refuse to comply with these new documents because they may use different terms and this is seen to complicate things.

In the absence of a power of attorney, family members often go to court to be appointed guardians, and this of course results in delays and legal fees. So, if you do spend time out-of-state, executing a local power of attorney may be a good idea.

Probate In Different States

Each state has its own allowed probate-avoidance methods.  Many people want to avoid probate, and by creating a living trust, you can help your heirs avoid probate when you pass away.

There are online information and tips on how to create these living trusts online in a few easy steps.  It a court-supervised process of settling a decedent’s estate, but you need to understand exactly why it can work out to be expensive and why you should avoid it and how to go about it.

Probate is another state, known as ‘ancillary probate’ which can amount to trouble and expense. The executor will quite likely need to find a lawyer in the new state to hand the probate.

With state specific estate planning laws, if you were to move to another state, it would be wise to make sure that your estate planning documents that were executed in one state will be recognized in your new state. You can always have your estate plan reviewed by an estate planning attorney in your new state.

Your Estate Plan Must Be Reviewed

Your Estate Plan Must Be Reviewed

Everyone needs to have an estate plan and review it every now and then to make provision for changes in individual circumstances and to cater for laws that may have changed.  Certainly, when you move to a new state it is a good idea to think of having your documents reviewed by an estate planning attorney in your new home state.

This is because the laws governing the drafting and validity of the document vary from state to state. Each state has its own laws that govern the likes of trusts, powers of attorney, the legal validity of wills, and others.

These laws establish the legal requirements for estate planning documents. True, most of the states are adopting uniform laws governing trusts. This is known as the ‘Uniform Trust Code.’ There are still some states that haven’t adopted these uniform laws. Then state specific estate planning laws still apply to them as they have different laws governing these estate planning documents.

Also, each state has other indirectly related laws and these could also have an impact on your estate plan as regards estate taxes and other taxes, rights to marital property with a divorce, laws defining marriage, and the administration of estates among others.

State Specific Estate Planning Laws – Different States Could Mean Delays

Estate planning documents drafted in another state may well be recognized by your new home state, however, the new state’s laws on your estate planning documents may result in consequences that delay things at a time when you need to be relying on them.

Also, the laws that govern estate plans are always changing so every estate plan needs to be reviewed from time to time to address these changes. An estate plan isn’t standard and constant. It is something that is constantly changing and evolving and therefore these changes make reviews of your estate planning documents important, more so when you move to a new state.

Estate planning is a lifelong thing – an ongoing process, and you need to be looking at it as your life and circumstances change over your lifetime.

Estate planning documents are definitely impacted by a move to a different state from the state where the documents were actually drafted. Everyone with an estate will need to check out their state specific estate planning laws and consult with financial advisors such as tax advisors to see what the tax implications are.

Estate Planning Is Essentially Valid In Every State

People are inclined to think that estate planning is only for wealthy people and businesses, but it’s for those with few assets as well. With a lack of mental capacity, your family may not receive the few assets they deserve to receive. Then the court steps in and controls how your assets are used for your care through guardianship.

It can work out to be expensive and also time-consuming. If you die without an estate plan, assets owned by you will be distributed according to your state’s intestacy laws. It is better to have your estate matters handled privately and not by the courts.

When it comes to state specific estate planning laws, what actually happens if you move to another state? Do all your estate planning documents count for nothing?  A lot went into their planning and preparation and you no doubt hired an attorney to help you.

It seems ludicrous that just because there are state specific estate planning laws, that you have to start over with the estate planning documents.  Many people don’t want to risk the chance of having documents that don’t meet the legal requirements when they move to a new state and they do about getting a new set of documents.

State Specific Estate Planning Laws – Differences Just Essentially Cause Delays

Differences Just Essentially Cause Delays

If you prepared a will in your old state, it will in all likelihood be valid in your new state too.  But having said that, out-of-state will do pose some problems. If you’re married and move from a community property state to a common law state or the other way around, the rules with regards to what you can own can change.

In community property states, married couples own everything together. In other states, however, it could be that each spouse takes whatever is in their name. This means that if you were to move to a community property state, your property will be treated as if was bought in the community property state.

A revocable living trust doesn’t adhere to the same rules as a will and it should be valid in any state, regardless of where you signed it.

It is always important to make sure that your living trust, power of attorney or will document are in compliance with your new state’s laws otherwise you may find that they don’t perform the way they are supposed to.

There are some key differences in the different states. Your estate plan does likely consist of powers of attorney for financial decisions. Estate plans are drafted according to the laws where you lived first and not your new state and these laws affect your inheritance tax.

New State – Time To Review Estate Planning Documents

What might have been a good plan then may not be as good in your new state. Look at the age of your estate plan, because regardless of relocation, it is always best to review your plan every few years, especially when there have been some major changes in your life.

Even with state specific estate planning laws, an attorney may want to interpret your document but won’t necessarily have the experience of the laws that existed in the state that you come from. Forms and authorizations are different, and it could be that even those terms that appear the same may have different legal meanings.

Medical Care

Take a look at your medical care as health care powers of attorney do differ between the different states. Medical personnel will probably only be familiar with their state’s forms. If you aren’t able to share your medical information, your agent’s authority could encounter all kinds of delays because of different documents.

In fact, legal counsel may even have to confirm your documents’ validity and this could imp[act on the care you need. You may even have nominated certain individuals to act for you for medical and estate matters.  Geographically, important decisions surrounding your medical care may become slow, time-consuming, and troublesome. Also, some states don’t allow non-resident executors and in fact, there are only a few states that do allow this. Other states impose other requirements.

Marital Property Laws

Marital property laws are all about determining the division of assets between spouses. There are a few states that recognize the property as community property, treating all assets acquired during the marriage as owned by both spouses.

Then again, other states recognize common law property – each spouse’s property is owned by the specific person. Community property may be more beneficial at death for income tax purposes but you have to consider all these things when moving to a new state.

Property Titling

If you have moved to a new state, check out what state specific estate planning laws exist. Certainly, a new attorney will review the titling of your assets, and depending on your circumstances, it may be more beneficial to transfer title to the name of your trust.  Certain titling may not be the same across the different states and could impact the distribution of your property when you die.

Some states have certain property laws that can be impacted by your estate planning. Florida’s homestead laws as an example could override your estate plan. At your death, you will be required to distribute your primary residence to your spouse and children.

Property deeds are legal documents that transfer ownership of the property to the buyer. For a deed to be legal it has to state the name of both seller and buyer.

Events or changes in circumstances create a need to update estate planning. Estate planning laws aren’t national and state specific estate planning laws that apply to each state. Some of the differences can be quite substantive and there are quite a few states that require a  spouse to inherit a minimum share of the estate, but the requirement varies between the states.

Also, there are those states that have estate- or inheritance tax while others don’t. State laws vary with other things too, such as powers of attorney and if you move, these documents will need to be updated for your new state.

Out-Of-State Executors Allowed

As already mentioned, if you have an estate plan, it is recommended that you review and revise your estate plan every 3 years. Also, make sure that the executor you have chosen can serve in your new state. Most states do allow out-of-state executors, but they may have special requirements that need to be fulfilled.

There are some states that require an out-of-state executor to appoint an in-state agent in order to accept legal documents for the estate. These executors step in and see to all the person’s arrangements.

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