Does Moving to Another State Affect Your Estate Planning?

Preparing to move almost requires a degree in logistics. It involves juggling numerous tasks, such as organizing and packing belongings, coordinating with movers, managing timelines, and ensuring that nothing gets lost or damaged in the process. 

Various forms need to be updated, such as the USPS change of address, driver’s license, vehicle registration, and voter registration. Furthermore, each state has its own laws, and what is legal in your current state may be outlawed in your new locale. Does that also include your estate plan?

How State Laws Influence Estate Planning

Your estate plan consists of legal documents that dictate what happens to your assets and healthcare decisions if you become incapacitated or pass away. The core elements include:

• A will that directs how your assets get distributed after death and appoints guardians for any minor children
• Power of attorney (POA) to handle your financial decisions if you can’t
• Advance directives and a healthcare proxy, which outline your medical care preferences and appoint someone to make decisions for you
• Trusts to manage assets during your lifetime and beyond

Each state has its own rules regarding these documents. What’s valid in California might not meet the requirements in Texas, Florida, or New York. For example, in California, probate can be expensive and time-consuming, taking 12-18 months and costing 3-7% of the estate’s value. Texas and Florida have relatively efficient probate procedures with lower costs, whereas New York has complex rules that can significantly extend the process.

California vs Other States

California is one of nine states that recognize community property. Any assets acquired during the marriage belong to both spouses equally. Other states follow the common law property rules, where the person’s name on the title determines ownership. Moving from California to a common law state requires a review of how assets are titled and potentially an update to your estate plan to reflect the new ownership rules.

California doesn’t impose state estate and inheritance taxes. However, 12 states and the District of Columbia have their own estate taxes, and six states impose inheritance taxes on the beneficiaries. If you move to another state from California, you might need to restructure your estate plan to minimize the tax burden on your beneficiaries. This could potentially save your loved ones a significant amount of money.

If you continue to own property in California and purchase some in your new state, you need to consider that each piece of real estate is subject to the laws of the state where it’s located. You will also need to review your assets that are outside of your will and are passed on through beneficiary designations, such as life insurance policies, bank accounts, and retirement investments like a 401(k).

Your digital assets, including social media accounts and cryptocurrency holdings, also need to be addressed in your estate plan. Some states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act, while others have limited or no specific laws governing digital assets. Complicating matters even more is the issue that tech companies may have their own policies that override state laws. Your estate plan should include provisions for digital estate management that comply with the laws of your new state.

Estate Planning Guidance from LPEP Law

Estate planning is complex, and interstate moves make it even more challenging. Our attorneys at Lonich Patton Ehrlich Policastri specialize in estate planning and are familiar with the differences between states. They can work with you to review and update your existing plan.

Contact us at 408-553-0801 to schedule your free consultation. Remember, estate planning isn’t a one-and-done task. It’s an ongoing process that should evolve with your life circumstances, including where you live.

 

Disclaimer: This article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.