At the end of the estate planning process, clients often ask whether they should update or revise their estate planning documents if they move to a different state in the future. The short answer to this question is usually yes: at the very least, contract a local attorney to review the estate plan to ensure that the documents align with the new state’s probate and testamentary laws. This article illustrates why it is a good idea to review, and sometimes revise, estate planning documents after moving to a new state.
The first reason that an estate plan should be reviewed by a local attorney is due to the fact that each state has its own particular estate planning laws. Each state has its own set of laws governing testamentary disposition, health care, and other estate planning topics that could affect the effectiveness an individual’s estate planning documents.
In an effort to alleviate the confusing web of state laws affecting estate planning, several national movements have attempted to promote a uniform set of estate planning standards among the states, and have created templates such as the Uniform Probate Code, the Uniform Trust Code, and the Uniform Power of Attorney Act.
Despite these efforts, however, many state’s probate and estate planning laws still have the potential to contain significant differences. Specifically, there are three areas of law that tend to affect estate planning documents the most: (1) required signing formalities, (2) marital property law, and (3) tax and the court probate process.
Washington State, much like every other state, has its own set of rules regarding the execution, or signing formalities, for estate planning documents. (See RCW 11.12.020 for Wills; RCW 11.125.050 for Powers of Attorney; and RCW 70.122.030 for Advance Health Care Directives). Washington State law, notably, differs from some other states’ laws in that it does not require that a Last Will and Testament be notarized to be valid. Instead Washington law simply requires that the Will be signed in the presence of two witnesses (RCW 11.12.120). Many Washington attorneys nonetheless have the Will notarized as a matter of good practice and in an abundance of caution.
Washington’s absence of a notarization requirement is just one example that differences may exist in the signing requirements of estate planning documents. It is because these differences in state law can exist that it is important to double check compliance with the new state’s law before, or soon after, a move to a new state.
It is not all doom and gloom, however, in regards to the web of varying state laws regarding the execution of legal documents. In an effort to avoid the confusion and chaos that could result from having 50 different standards for how legal documents are executed, a large number of states have enacted “reciprocal” laws, which are laws that explain that, if a document was properly executed in another state according to that state’s laws, then that legal document will be recognized as valid by the new state.
Washington State, for example, has just such a provision regarding Wills, which outlines the signing requirements for a Will and provides that:
“A last will and testament, executed in the mode prescribed by the law of the place where executed or of the testator's domicile, either at the time of the will's execution or at the time of the testator's death, shall be deemed to be legally executed, and shall be of the same force and effect as if executed in the mode prescribed by the laws of this state.”
RCW 11.12.020. As this Washington statute shows, a document not executed according to the current state’s execution standards can sometimes nonetheless be held to be valid under these reciprocal state statutes. These reciprocal statutes can often help to reduce the burden of having to re-execute legal documents each time someone moves to a new state. Someone who moves to a new state nonetheless should be diligent in confirming that the new state either has the same signing requirements as the old state, or that the new state has reciprocal statutes such as RCW 11.12.020.
Another significant difference in state law that can affect estate planning document is the law regarding the distribution of marital property. Washington State, for example, is one of nine “Community Property” jurisdictions in which, very generally speaking, a spouse has the power to give away at death only that spouse’s half of the community (marital) property.
The remaining states use variations of a “separate property” system that a completely different set of rules to determine what property a spouse is permitted to give away at death. Marital property laws are much more complex than this post can explore fully, but suffice it to say, these differing sets of state marital property laws serve as another reason for individuals who have moved to a new state to update or review their estate planning documents.
The last major category of differences in state laws regarding estate planning is a critical one: tax and probate considerations.
Probate is the court process that is sometimes required to transfer property after an individual has died. The probate process can vary dramatically from state-to-state. California, for example, is notorious for having an expensive, inefficient, and cumbersome probate system, which is why nearly everyone living in California uses a Revocable Living Trust or other probate-avoidance plan. Washington State, on the other hand, has one of the more streamlined probate systems in the nation, and therefore probate-avoidance plans are not as widely used in Washington State as they are in California. These wide differences in probate processes is yet another reason to revise or update an estate plan after moving to a new state.
It is only fitting to discuss taxes in the context of estate planning. There are a few different types of state “death taxes” that may affect a decedent, namely either estate tax or inheritance taxes. Just under half of all states levy either an estate tax or inheritance tax, and some states, such as Maryland and New Jersey, levy both types of taxes.
The rules for these death taxes can vary dramatically by each state, and becoming a resident of a new state often exposes an individual to a very different set of death tax rules. Washington State, for example, levies an estate tax on Washington residents who die with a taxable estate greater than 2.129 million dollars (as of 2017). Failing to revise or update an estate plan in light of a new set of death taxes can be a costly mistake especially for those with a large amount of assets.
Those moving into new states would be wise to have their estate planning documents reviewed by a local attorney to ensure that the documents align with the local state laws regarding signing formalities, marital property laws, and probate and tax considerations. In some cases, estate planning documents may be fine remaining unchanged after a move, but having a local attorney review the documents is nonetheless a vital step in performing a crucial conflicts-check with the laws of the new state. As with many matters involving estate planning, taking quick and low-cost steps today can save potentially costly and long-term problems in the future.
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