State boundaries affect estate plans

On Behalf of | Jan 5, 2021 | Estate Planning |

The 4.7 million Americans who moved to a different state in 2019 had to get a new driver’s license, update their address, and find a new doctor. Anyone moving into Texas or making another interstate move should also update their estate planning documents to assure that their will, living trust, living will and power of attorney comply with laws of the state where they now live.

Why change?

Even though your plan was created elsewhere, it is likely valid in the state where you now live. But those estate plans were drafted under the laws where you lived and may not reflect the legal requirements of the state you moved to. Each state has different laws on estate and tax matters which may impact the interpretation and effectiveness of your estate plan.

Attorneys and other professionals in Texas may have to interpret your estate documents under other state laws even though they lack experience with those laws. Forms and authorizations may be different. Texas legal terms may have different meanings in other states.

Medical care

Health-care powers of attorney and other medical directives are different for each state. Medical providers are typically familiar with their state’s forms so out-of-state forms may complicate or delay a medical care agent’s authority.

Also, your named agent may be far away. This can also complicate and delay important decisions. States may also impose different requirements for appointing agents.

Marital property

State marital property laws determine the division of assets between spouses when they divorce or upon death. Texas and nine other states are community property states that treat all assets acquired during marriage, except for gifts and inheritances, as property equally owned by both spouses. Most other states are common law property or equitable distribution states.

Community property states may be more favorable at death for income taxes but less favorable in a divorce. Spouses in community property states usually have joint revocable trusts for all martial property.

Titling property

Rights to property ownership such as tenants by the entirety, joint tenancy and community property differ among the states. Ownership should be closely reviewed after a move.

Taxes

Texas and most states do not impose an estate tax. The federal estate exemption is above $11.58 million. But estate plans should be reviewed to reflect the new state’s tax liability for property, trusts or other income.

Even without a move to another state, your estate plan should also be reviewed and possibly revised every five years to reflect changes in the tax laws and major life events. An attorney can help assure that your estate plan meets your needs in Texas.

 

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