Estate Planning After a Move
By Liza Hanks
Finch Montgomery Wright
Things change. It's a given. And people move into California and out of California all of the time. Often, people ask me whether or not their out-of-state estate plan is still valid in California or whether or not their California estate plan will still be valid in another state. If you are facing a move out of state, or have just relocated to Silicon Valley, here are the main things that you should consider.
First, even though you have probably gone to a lot of time and trouble (and expense) to get your estate plan written, generally speaking it's going to make sense for you to update or change that plan so that it conforms to state law. It's not really a question of whether a plan is valid or not, at least in strictly legal terms -- the issue is more that state law determines most of the details of inheritance law, and documents drafted in another state may not be entirely consistent with a new state's laws. So, even if a document is valid in another state, whether it will accomplish your objectives and be easy to use in that state is actually the more relevant question. That's kind of the bad news. The good news is that, having already put together an estate plan once, you've done most of the hard work already in terms of making the tough decisions about guardianship and management of an estate, so revising those decisions in a new format is usually easier the second time around.Wills
A Will that is valid in one state will be valid in another. So, if a Will was executed properly in California, it can be submitted to probate in Ohio. But if you have moved to Ohio, there are lots of good reasons to do an Ohio Will. First, California is a community property state. But most states do not have community property rules. So, married couples who move elsewhere are going to need to understand their new state's rules about who owns what.
Conversely, couples moving into California need to understand our rules so that property that they consider to be separate does not become community property here. Second, state law governs the nomination and appointment of guardians for minor children, so it's important for parents to be sure that their Will nominates guardians properly. Third, clients who move far away may want to reconsider who they've named as executors to make sure that the executor can actually serve. Some states, like Florida, require an executor to be either a blood relative or a Florida resident. Other states impose bond requirements on out-of-state executors that can make probate more expensive and restrictive.Living Trusts
Like Wills, living trusts that are validly executed in one state are legally valid in another. But, like Wills, it often makes sense to re-do them under local law. For one thing, not all states have expensive and slow probate processes like California does. In those states, most estate plans use Wills to transfer property after a death, so a living trust may not even be necessary. For another, state law varies on the details of trust administration with respect to things like who gets notice after a death and what kind of information beneficiaries are entitled to get after someone dies. Such differences in state law would make it difficult, for example, to administer a California trust in Ohio properly. Finally, if a couple moves out of Silicon Valley and no longer owns real property in the state, there's no good reason to keep a California trust to hold property in a new state, it would make more sense to put a plan in place to avoid probate there, if that's necessary.Durable Powers of Attorney and Health Care Directives
Durable Powers of Attorney and Health Care Directives need to be updated to conform with state law. Banks and other financial institutions want Powers of Attorney to be drafted under that state's laws and health care law varies from state to state with respect to what rights patients have to control their own health care decisions. Some rights granted under California law are simply not granted elsewhere. And on a practical level, both documents are just easier to use when banks and doctors are familiar with them. Even the names of these documents vary state by state: some states have Advance Health Care Directives, some have Durable Powers of Attorney for Health Care. In some states, you appoint an "Agent" to act for you. In others, this person is called a "Proxie."Beneficiary Designations
Beneficiary designations are contracts between a person and a financial institution. While these designations are not going to become invalid because a person moves, they may be out of date whenever a person goes through a major life transition. So, it always makes sense to review them after a move and, if they name a Will or living trust, and those documents change, it will be important to update the beneficiary designations to match.Put Reviewing The Plan On the To-Do List After a Move
For all of these reasons, it's a good idea to review an existing estate plan after a big move. Maybe not before the dishes get unpacked, but definitely before everyday life gets so busy that it's hard for you to remember that you have ever lived elsewhere.
Even in the unlikely event that all of a new state's laws happened to agree on every provision in a client's existing estate plan, you'd still want to update it to:
- Reflect a new house, instead of the one you sold when you moved
- Reflect your new retirement accounts, stock options, company-sponsored life insurance or other changes in financial assets due to the change in work
- Ensure that your selection of guardian or other child-related provisions are still valid even though you've moved
- Ensure that your selected executor would be able to serve
Feel free to contact me if you are facing a move (or recovering from one) that would like to have your existing plan reviewed. You can email me at email@example.com or call me at 650/327-0088. You can also download my book, The Family's Guide to Wills and Estate Planning, for free.