When a person is moving to a new state, it’s important to update their estate plan. Wills and trusts are usually part of the planning process.
Will and trust documents
A proper will follows the law of the home state, but switching states could complicate matters. Estate planning should hold up across state lines, but heirs may have to rely on other states’ laws to validate trusts and wills. Attorneys from both states should help with the process of moving. Updating the estate plan is best soon after switching states.
State-level estate taxes
State-level estate taxes affect estate planning documents because taxes differ from state to state. Estates can give gifts up to the tax-free transfer amount. State taxes vary, and the amounts for tax-free gifts change.
An example is a married couple setting up a bypass after one of them dies. The amount is the highest amount able to be tax-free. If they live a state without estate taxes, the amount is the full federal allowance. If they move to a state with estate taxes, they could end up with a hefty estate tax bill.
An out-of-state executor could have a harder time serving than one based within the state where the person’s property is held. An out-of-state executor may need to post a bond. It’s expensive and time-consuming for someone outside of the state to handle the details of a property sale. It might be better for a person to get a closer person or corporate executor. Health care directives are other documents that need to follow the new state’s laws.
There are many aspects to updating estate planning when moving to a new state. A person needs to update their documents to make the new state their legal domicile, which helps to clarify matters if they keep their old house. The tax responsibilities of the estate may change after selecting a new domicile, so updating an estate plan is the best way to prepare for these changes.