Should you Update your Estate Plan if you Move to a New State?

Moving to a new state might mean estate plan changes for legal reasons, but more likely because of your change in circumstances.

I recently had a discussion with a client regarding whether and how they should update their estate plan if they move to a new state.  That conversation comes up frequently, so I thought it would be a great topic for a blog article.

The U.S. Constitution requires states to give “full faith and credit” to the laws of other states. As a result, your will, trust, power of attorney, and health care proxy executed in one state should be honored in every other state.  However, even if they are “valid” in another state doesn’t mean they will work well under that state’s laws or that they will work as well in practice, as described in Wealth Advisor’s recent article entitled “Moving to a New State? Be Sure to Update Your Estate Plan.”

Your last will should still be legally valid in the new state. However, the new state may have different probate laws that make certain provisions of the will invalid or no longer ideal.  By way of example, Texas has a unique form of probate in which there is an independent executor.  This minimizes court involvement in the probate which is what most clients prefer.  We often revise wills of clients moving to Texas to authorize independent executors.  Similarly, other states might have other unique provisions that you would want to utilize in that state.

This can also happen with revocable trusts, however trusts tend to be more portable.  Once a trust is funded, you can change any provisions you need to ensure it works in that state and you can elect that state’s laws.  So, it might need to be updated, but often is more portability.

You may also want to update your estate plan if you move to a new state to change your powers of attorney and health care directives. These estate planning documents should be honored from state to state, but sometimes banks, medical professionals, and financial and health care institutions will refuse to accept the documents and forms.  Each state has very specific roles on how these are created and what they can accomplish, so it is typically advisable to create new ancillary documents based upon the law of the new state.

It is also helpful to keep in mind that it is practically important to redo ancillaries documents because lawyers and judges aren’t the ones reviewing them.  Court systems will know how a will or trust applies under that state’s law because lawyers are involved in the process.  Incapacity documents such as the power of attorney and health care directives are reviewed by non-legal professionals such as title companies, doctors, bankers or their support staffs.  So practically speaking, it is easier to give them what they expect to see as they won’t have the expertise to recognize whether an out of state document is valid.

You should also know that the execution requirements of your estate planning documents may be different, depending on the state.

For example, there are some states that require witnesses on durable powers of attorney, and others that do not. A state that requires witnesses may not allow a power of attorney without witnesses to be used to convey real estate, even though the document is perfectly valid in the state where it was drafted and signed.

When you move to a different state, it’s also a smart move to consult with an experienced estate planning attorney because interstate moves often mean another change in circumstances that would necessitate a change to the estate plan.  For example, the move might have been because of a change in income, marital state or to support a family member in ill health.  You can see here for other reasons to consider updating your estate plan at that point.  https://galligan-law.com/when-to-update-your-estate-plan/

Moreover, there may be practical changes you want to make. For example, you may want to change your trustee or agent under a power of attorney based on which family members will be closer in proximity or to someone familiar with the new property.  This is also a good time to review trust funding as you will have new assets.

For all these reasons, when you move out of state it’s wise to have an experienced estate planning attorney in your new home state review your estate planning documents.

Reference: Wealth Advisor (Jan. 26, 2021) “Moving to a New State? Be Sure to Update Your Estate Plan”

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What Estate Planning Mistakes Do People Make?

Clients often make these estate planning mistakes which jeopardize family harmony and expose families to anxiety, delay and unnecessary cost.

Estate planning for any sized estate is an important responsibility to loved ones. Done correctly, it can help families flourish over generations, control how legacies are distributed and convey values from parents to children to grandchildren. However, a failed estate plan, says a recent article from Suffolk News-Herald titled “Estate planning mistakes to avoid,” can create bitter divisions between family members, become an expensive burden and even add unnecessary stress to a time of intense grief.

Here are some estate planning mistakes to avoid:

This is not the time for do-it-yourself estate planning.

An unexpected example comes from the late Chief Justice of the Supreme Court Warren Burger.  He wrote a 176 word will, which cost his heirs more than $450,000 in estate taxes and fees. A properly prepared estate plan could have saved the family a huge amount of money, time and anxiety.  This example also points out that even brilliant legal minds make mistakes if they aren’t experts in this area!

Don’t neglect to update your will or trust.

Life happens and relationships change. When a new person enters your life, whether by birth, adoption, marriage or other event, your estate planning wishes may change. The same goes for people departing your life. Death and divorce should always trigger an estate plan review.  Clients often confront this estate planning mistake at this time of year as part of new years resolutions or as part of a financial check-up with their financial advisors, so now is an excellent time to consider it.

Don’t be coy with heirs about your estate plan.

Heirs don’t need to know down to the penny what you intend to leave them but be wise enough to convey your purpose and intentions, at least to the individuals in charge of the plan. If you are leaving more uneven amounts to children for example, it may be a kindness to explain why to your love ones.  Otherwise, they will be forced to come up with their own answers, which may lead to fighting. If you want your family to remain a family, share your thinking and your goals.

If there are certain possessions you know your family members value, making a list those items and who should get what. This will avoid family squabbles during a difficult time. Often it is not the money, but the sentimental items that cause family fights after a parent dies.  Some of the worst estate disputes I’ve ever dealt with were over sentimental items.

Clients often ask about this topic, so see this article if you are interested in more information.  https://galligan-law.com/how-to-avoid-family-fighting-in-my-estate/  

Understand what happens if you are not married to your partner.

Unmarried partners do not receive many of the estate tax breaks or other benefits of the law enjoyed by married couples. Unless you have an estate plan in place, your partner will not be protected. Owning property jointly is just one part of an estate plan. Sit down with an experienced estate planning attorney to protect each other. The same applies to planning for incapacity. You will want to have appropriate incapacity planning documents such as financial and medical Powers of Attorney so that you may speak with each other’s financial institutions and medical providers.

Don’t neglect to fund a trust once it is created.

It’s easy to create a trust and it’s equally easy to forget to fund the trust. That means retitling assets that have been placed in the trust or adding enough assets to a trust, so it may function as designed. Failing to retitle assets has left many people with estate plans that did not work.  Happily this is a very easy estate planning mistake to correct, though you should consult an attorney on how to properly utilize your trust.

Don’t be naive about people you put in charge of your estate plan.

It is not pleasant to consider that people in your life may not be interested in your well-being, but in your finances or other self-serving motivations. However, we see this all the time. This concern must be confronted honestly, even when it is children, during the estate planning process. Elder financial abuse and scams are extremely common. Family members and seemingly devoted caregivers have often been found to have ulterior motives. Be smart enough to recognize when this occurs in your life.

Reference: Suffolk News-Herald (Dec. 15, 2020) “Estate planning mistakes to avoid”

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Long Distance Caregiving During These Difficult Times

A well thought out plan is the key to effective long distance caregiving.
A well thought out plan is the key to effective long distance caregiving.

Trying to coordinate long distance caregiving is a challenge for many. Add COVID-19 into the mix, and the situation becomes even more difficult, reports the article “When your parent is far away and you are trying to care for them” from the Pittsburgh Post-Gazette.

If you are in the position of having to care for a loved one long distance, the starting point is to have the person you are caring for give you legal authorization to act on their behalf to make financial and medical decisions for them. A financial power of attorney (known as a Statutory Durable Power of Attorney in Texas) naming you as agent will allow you to help manage your loved one’s financial affairs.  It is also important that the person give you a HIPAA Release. HIPAA (Health Insurance Portability and Accountability Act) is the law that governs the use, disclosure and protection of sensitive patient information. With a HIPAA Release you will be able to receive medical information relating to the person you are caring for and to discuss matters with the person’s health care providers.

Next, find out where all of their important documents are, including insurance policies (long-term care, health, life, auto, home), Social Security and Medicare cards. You’ll also want to be able to access tax documents which will provide you with information on retirement accounts, bank accounts and investments. Don’t forget to ask your loved one for family documents, including birth, death, and marriage certificates, which may be necessary to claim benefits. Make copies of these documents so that you can make appropriate decisions for your loved one, even from a long distance.

Ask your family member whether he or she has completed their estate planning, and whether they want to make any changes. You may wish to review with your loved one changes that indicate when an estate plan should be updated. See https://galligan-law.com/when-to-update-your-estate-plan/.

Put all of this information into a binder, so you have access to it easily.

Consider setting up a care plan for your family member to take care of things that come up when you can’t be there. Think about what kind of care do they have in place right now, and what do you anticipate they may need in the near future? There should also be a contingency plan for emergencies, which seem to occur when they are least expected and which make long distance caregiving especially difficult.

A geriatric care manager or a social worker who can do a needs assessment can help coordinate services, including shopping for groceries, administering medication and help with food preparation, bathing and dressing. If possible, develop a list of neighbors, friends or fellow worshippers who might create a local support system that compliments your long distance caregiving.

Keeping in touch is very important. These days, many are doing regular video calls with their family members. Conference calls with caregivers and your loved one is another way keep everyone in touch.

Long distance caregiving is difficult, but a well-thought out plan and preparing for all situations will make your loved one safer.

Reference: Pittsburgh Post-Gazette (Sep. 28, 2020) “When your parent is far away and you are trying to care for them”

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