Are you moving to a new state? If so, it can be important to update your estate plan for several reasons. For instance, if you are married, each state treats marital property differently, and there can be different tax laws with respect to state income tax and inheritance tax. Let us review three reasons why you should update your estate planning documents when moving to a new state.
1. Marital Property Laws May Differ. Some states have community property laws, while others operate on the idea of common property. There are big differences between the two. In nine states, all property that two spouses acquire during their marriage is considered community property that is owned equally by the two spouses, unless it is an inheritance given to one spouse. In the other states, each spouse is considered to own his or her property individually, unless it is purchased in both names. If you are moving between a community property state and a common law property state, you may be able to legally ensure that marital property retains its nature as either community or common law property, if you want it to, by consulting with a qualified estate planning attorney who can help ensure your documents reflect your needs. This can be very important because community property and common law property may be treated differently both for ownership and tax purposes.
2. State Income and Estate Taxes Vary. Every state gets to decide whether to impose state income or estate tax, and how high the rates should be at varying income levels and estate sizes. An estate planning attorney in your new state can help you update your estate planning documents to take into account the different tax rules and determine what may work best for your family.
3. Joint Assets May Need to Be Re-Titled. Each state recognizes different types of joint ownership of assets. Most married couples own at least some assets together, but if you have assets titled as community property, joint tenants, or tenants-by-the-entirety, these forms of ownership may not be recognized in your new state. You will need to re-title them to help ensure they are owned and transferable in the manner you intend, particularly if you owned an asset in one of these forms with a right of survivorship, so that the property goes to the intended recipient when one or both of you pass away.
Our office can guide a family through their estate planning options. Please contact our office today to schedule a meeting with attorney Alan Hougum.