Is an Estate Plan Created in One State Valid in Another? Portability of Estate Plans Across State Lines*
While most estate planning documents drafted and executed in one state would be recognized by other states if you move to another state, you should have your estate plan reviewed by an estate planning attorney in the state where you move. The typical estate plan includes wills, powers of attorney for financial and medical decisions, and, potentially, a “living will” or similar medical directive that dictates your wishes and objectives with respect to termination of life support and other “end of life” decisions. Your plan may also include one or more trust agreements designed to mitigate estate taxes, ease the cost and burden associated with estate administration, and/or keep certain beneficiaries from having unfettered access to assets because of age, competency, or other reasons. The lawyer drafting your estate planning documents (hopefully) did so based on laws governing these documents in the state where you resided at the time, the then current federal and state tax laws, and your personal and financial circumstances at that time. Everyone should (a) have an estate plan and (b) review that estate plan from time to time to adjust for changes in laws and in your individual circumstances. A change in your state of residence only accentuates the importance of a review by an estate planning attorney in your new home state. Here’s why:
The laws governing the drafting, interpretation, and validity of estate planning documents vary from state to state. Each state has laws that govern wills, trusts, powers of attorney, and medical decisions. Those laws set forth the legal requirements for, and allowable provisions that can be included in, all of these estate planning documents. Even though more and more states are adopting so called “uniform” laws governing trusts (the “Uniform Trust Code”) and powers of attorney (the “Uniform Power of Attorney Act”), state legislatures typically modify the uniform language for adoption in their state resulting in similar, but not identical provisions from state to state. Other states have not adopted these uniform laws and have entirely different laws governing these estate planning documents. Additionally, each state has other indirectly related laws that may have an impact on your estate plan including laws defining and/or governing marriage, rights to marital property upon divorce, rights with respect to a deceased spouse’s estate, estate taxes, other taxes, the administration of estates, etc. Accordingly, estate planning documents drafted in another state may be recognized by your new home state, but the overlay of that new state’s laws on your existing estate planning documents may result in unintended consequences when you or your family needs to rely on them most.
The laws governing and/or effecting estate plans constantly change. Every estate plan should be reviewed from time to time to address changes in laws as well as changes in your personal, family, and financial circumstances, even when an interstate move is not involved. In Virginia, over the past five years alone, the laws governing all of the estate planning documents discussed above have been amended, recodified (i.e., the code section has changed), or both. On the Federal level, Congress recently amended the Federal laws and regulations governing estate and gift taxation. Moreover, the United States Supreme Court recently issued decisions involving the definition of marriage and the ability of nontraditional couples to take advantage of changes in Federal estate tax laws.
Conclusion. Contrary to what most people think, an estate plan is not a “one and done” proposition; an estate plan, just like you, your family, and federal and state laws, constantly changes and evolves. These changes make periodic reviews of your estate planning documents important. Moving to a new state makes a review of your estate plan and documents even more imperative.
Scott D. Stovall, Esq. is licensed to practice law in the state of Virginia and is a member of the CowanGates Estate Planning, Business Law, and Real Estate teams. If you have questions on the issues presented in this pamphlet or would like to discuss or review your estate plan, please visit our website, www.cowangates.com, or contact Scott at (804) 320-9100 or by email.
[*] This article is intended to provide general guidance on estate plans, the importance of reviewing estate plans, and, in general, how estate planning documents are impacted by a move to a different state from the state where they were drafted. This article does not constitute, and should not be treated as, legal advice regarding any particular estate planning tool or technique, your particular estate, or the tax consequences associated with the use of any particular estate planning tool or technique. Each recipient and reader of this article should consult with counsel and other advisors (i.e., tax advisors) to determine both the tax and non-tax implications and consequences of using or recommending the use of any particular estate planning tool or technique referred to in this article.