Moving states and what it does to your plan

Relocating is one of the most common triggers for an estate plan to become inaccurate, and one of the least recognised.

Validity versus effectiveness

Most states will recognise a will validly executed under the law of the state where it was made.

Which means the document is generally still valid.

Whether it still achieves what was intended is a different question, and the answer is frequently no.

What changes

Community property. The largest single issue.

A handful of states treat property acquired during marriage as owned equally by both spouses, with distinct rules on what can be disposed of by will.

Moving into or out of a community property state raises questions about the character of assets acquired before and after the move.

Some states have adopted rules preserving the character of property brought from a community property state, and the treatment is not uniform.

This warrants specific advice for anyone making such a move with substantial assets.

Spousal elective share rights, which differ considerably between states in size and in how they are calculated.

A plan built around one state's rules may be vulnerable under another's.

Probate procedure and cost, which vary enormously.

Someone moving from a state with expensive probate to one with a streamlined process may find a trust they established is now unnecessary — though generally harmless.

Someone moving the other way may need one.

State death taxes. A move into a state with an estate or inheritance tax creates exposure that did not exist, frequently at a threshold well below the federal one.

Homestead protections, which vary from generous to minimal and affect both creditor protection and what can be devised.

Some states restrict a homestead's disposition where there is a surviving spouse or minor children, which can override a will's terms.

Power of attorney acceptance. Institutions in a new state may be unfamiliar with an out-of-state form and reluctant to accept it.

Advance directive forms, which differ, and while most states honour out-of-state directives, using the local form avoids argument in a hospital.

Personal property memoranda, which are recognised in some states and not others.

What to do on moving

A review with an attorney in the new state, which is generally straightforward and inexpensive.

The specific items to check.

Whether the will should be re-executed under local law, which removes any question and is usually simple.

Whether the trust should be amended for the new jurisdiction, including the governing law provision.

New powers of attorney and healthcare directives on local forms.

Whether property titling should change.

Whether the new state's death tax creates a need for planning.

Whether the executor and trustee appointments are still practical, given that a non-resident executor may face additional requirements.

The domicile question

Separate from the documents and equally important.

Domicile determines which state taxes the estate and which state's law governs.

Someone who moves but retains a home, connections and time in the former state may be claimed by both, and states with death taxes do assert domicile over former residents.

Consistency across the indicators — voter registration, driving licence, vehicle registration, professional and medical relationships, where time is actually spent — is what establishes it.

Keeping records from the transition period is worth doing, since the question may be examined years later.

Property left behind

A common arrangement with a specific consequence.

Real property retained in the former state generally requires an ancillary probate proceeding there, in addition to the main administration.

Holding it in a trust, or using a transfer-on-death deed where the state permits one, avoids this entirely and is one of the clearer cases for such planning.

Moving abroad

A larger undertaking, briefly noted.

Cross-border estates raise questions of which country's law governs, whether a will made in one country is effective in another, treaty provisions on taxation, and forced heirship rules that exist in many civil law jurisdictions and can override testamentary freedom entirely.

Anyone moving abroad or holding assets abroad should take advice in both jurisdictions rather than assuming a domestic plan travels.

General information only, not legal advice. State and international rules vary substantially — consult a qualified attorney in the relevant jurisdiction.