Should You Update Your Estate Plan After You Move Out Of State?

Each year, more and more Americans are relocating to different states. Between 2021 and 2022, 8.2 million people moved. In 2023, 25.6 million Americans moved. Amid the stress and numerous adjustments that come with such a move, it’s understandable that many overlook reviewing their estate plans. However, due to the varying laws on taxes, property ownership, inheritance, and more, it’s crucial to reassess and possibly update your estate planning documents with a estate planning attorney.

Let’s explore some key legal issues you may encounter when moving to a new state and the adjustments that might be necessary for your plan.

Estate Taxes

The current federal estate tax exemption is $13.61 million for individuals and $27.22 million for married couples filing jointly, sparing most from federal estate taxes this year. However, the estate tax exemption will be cut to pre-2017 levels and will drop to $5 million (adjusted for inflation) for a single person. The decreased exemption will mean that more people will need to plan for a federal estate tax bill when they pass.

Also, as of 2021, 11 states impose their own estate taxes with much lower exemptions than the federal exemption. And, six states have inheritance taxes. Maryland has both inheritance taxes and their own estate tax. Fortunately, with proper planning, you might be able to minimize or avoid state “death” taxes. For a complete list of states with estate and/or inheritance taxes, visit: AARP – States with Estate and Inheritance Taxes.

Key Planning Documents

Contrary to popular belief, a will valid in one state may not be valid in another. This applies to other critical legal documents as well, such as living wills, health care proxies, powers of attorney, and more. Notably, the Uniform Power of Attorney Act, aimed at harmonizing power of attorney laws across states, has not been adopted by all states.

Consider the implications if health care providers in your new state do not recognize the medical power of attorney or health care proxy from another state. Your appointed agent won’t be able to make crucial decisions on your behalf during a medical emergency, potentially forcing your loved ones to go to court to validate the document. A medical crisis is not the time to worry about the enforceability of essential legal documents.

Your “Helpers”

When you move to a new state, it might not be practical for your helpers—like your agent, attorney-in-fact, or executor—to continue in their roles. As mentioned, there can be complications with powers of attorney. Additionally, most states do not allow non-residents to serve as executors, and those that do often require the executor to be directly related to you. Other states have further restrictions as well.

Moreover, states vary in their laws regarding community property, titling (which can affect your trusts), tenants by the entirety, and joint tenancy with or without right of survivorship.

The bottom line is, if you are planning to move to another state, or have already done so, it is essential to consult with a qualified estate planning attorney to review and update your plan accordingly.