Estate Planning in Different States

Estate planning in different states addresses key nuances between the states’ laws for people who move or spend much time in other states.

In this very mobile society, clients often move from state to state.  Whether the move is due to job opportunities, to be close (or far) from family or just for a change of scenery, many people will live in multiple states in their lifetime.  They often don’t realize that estate planning laws vary greatly from state to state and understanding the difference could have a significant impact on whether your estate plan is effective.  It is best to get this straight shortly after moving, says The National Law Review in the recent article “Updating Your Estate Plan: What Michigan Residents Need to Know When Moving to Florida.”

It’s not just people from Michigan who move to Florida who need to have their estate plans reviewed, if they are snowbirds or making a full-time move—it’s anyone who moves to another state, from any state. However, Florida’s popularity makes it a good example to use.

Florida restricts who is permitted to serve as a Personal Representatives under a will. The personal representative, also known as an executor, must be a descendant or ancestor of the decedent, a spouse, brother, sister, aunt, uncle, nephew, niece or descendant or ancestor of any such person or a Florida resident.

Florida doesn’t recognize “no contest” clauses in trusts or wills. It also does not recognize unwitnessed testamentary documents, which are handwritten documents even if they are in your own handwriting. By way of example, Texas does and have had to utilize that option during the COVID-19 lockdowns.

Florida also has a special set of laws, known as the Homestead laws, designed to protect a decedent’s surviving spouse and children. You may have had other plans for your Florida home, but they may not be passed to the people you have designated in your non-Florida will, if they don’t follow the Sunshine State’s guidelines.

Power of Attorney laws differ from state to state, and this can create huge headaches for families. In many states, powers of attorney can be “springing,” meaning they become effective upon disability. In Florida, once a Durable Power of Attorney is signed, it is effective. Florida may accept a power of attorney from another state, but Florida law will be applied to the agent’s actions, and restrictions will be based on Florida law, not that of another state.

Estate planning in different states is very unique when it comes to estate planning documents concerning medical and financial decisions while you are living, these are also different. I routinely tell people that if you relocate, you have to change these documents.  A living will names a person, known as a “Patient Advocate” in Michigan or a “Health Care Surrogate” in Florida, who is authorized to make decisions regarding end of life care, including providing, withholding, or withdrawing life-sustaining treatment. In Michigan, you need two doctors to certify a patient’s incapacity for non-life-or-death decisions. In Florida, only one doctor is needed.  Even simpler, these documents will not be reviewed by attorneys.  They will be reviewed by medical professionals rendering care to you.  So, it is best to give them the format they anticipate so there is not delay in providing care to you.

On a broader prospective, estate administrations are very different in different estates, and that leads to different goals in estate planning.  I’m admitted in Pennsylvania, New York and Texas.  In Pennsylvania, we frequently used wills as the primary estate plan vehicle because the probate process is easy to initiate, and all of the work of an estate administration exists whether or not you are using a trust.  In New York, we almost exclusively used trusts.  Probate was far more involved and expensive, which made living trusts extremely helpful to clients. In Texas, we definitely draft more trusts as they are still beneficial, but it isn’t nearly as critical as it is in New York.   To make it one step worse, Pennsylvania has inheritance taxes, New York has estate taxes, and Texas has neither.  Those are three very different estate planning realities.

As a final point, if you expect to relocate in the future and are considering estate planning, I strongly recommend a living trusts.  Trusts tend to be portable as they go outside of the court probate process, which is where many of the state nuances lie.  This is also helpful because clients who move often have real estate in multiple states.  Real property in multiple states potential means multiple probates, which people don’t expect.

So, if you are planning on a move or even if you just spend substantial time outside of your home state, meet with your estate planning attorney to understand how any and all of your estate planning documents will work—or not—when you are in another state.

Reference: The National Law Review (June 30, 2021) “Updating Your Estate Plan: What Michigan Residents Need to Know When Moving to Florida”

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Things You Should Not Keep in Your Safe Deposit Box

A safe deposit box may not be the best place to keep some items.
A safe deposit box may not be the best place to keep some items.

A safe deposit box isn’t a smart choice for everything. Kiplinger’s recent article entitled “9 Things You’ll Regret Keeping in a Safe Deposit Box” advises that there are some items you might not want to lock away in your bank, which isn’t open nights, holidays, or weekends. During this pandemic, hours of operation for many businesses are reduced. Some financial institutions have temporarily closed some locations. There are other banks that require an appointment for in-branch services, like accessing your safe deposit box. This could create a headache if you’re trying to retrieve important documents or items when you need them.

Here are some items you should store elsewhere, because may need to access them more often or on short notice.

Cash. Keeping a large amount of cash in a safe deposit box isn’t a good idea. If you need it at a time when the bank is closed, you’re out of luck. In addition, the cash may lose its buying power over time because of inflation. You may also find that some banks don’t allow cash in a safe deposit box. Finally, cash in a safe deposit box isn’t protected by the FDIC. To have FDIC insurance (covering up to $250,000 per depositor per insured bank), your cash needs to be deposited in a qualifying deposit account, such as a checking account, savings account, or CD.

Your Passport.  If you need to take an emergency trip, you would not be able to pick up your passport during non-banking hours. If your travel requires a passport, there’s not much you can do about those calls in the middle of the night requiring you to travel immediately.

The Original of Your Will. It may not be a good idea to keep your original will in a safe deposit box because after your death, the bank may require the executor named in your will to obtain a court order to access the safe deposit box. That could mean a long and expensive delay before your will is probated and your estate is settled.

Funeral and Burial Instructions. Many people execute a legal document regarding the disposition of their remains or write a letter of instruction with funeral arrangements to accompany their will. The problem is that, if these instructions are hidden away in your safe deposit box, they may not be read in time to have any effect.

Uninsured Jewelry and Collectibles. Heirloom jewelry and your valuable stamp collection and rare coins are good candidates for a safe deposit box, but they must be properly insured. The FDIC doesn’t insure safe deposit box contents, and neither does the bank, unless it’s stated in your agreement.

Any Illegal or Dangerous Items. Your bank should provide you with a list of items that are not permissible to keep in a safe deposit box. This will include things like firearms, illegal drugs and hazardous materials.

You may also be interested in https://www.galliganmanning.com/does-your-estate-planning-include-your-online-account-passwords/.

Reference: Kiplinger (June 1, 2020) “9 Things You’ll Regret Keeping in a Safe Deposit Box”

 

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