You spend your summers in Michigan. The rest of the year, you live out-of-state in Florida or another state. You have your will, financial power of attorney and healthcare power of attorney and maybe a trust. But they were prepared in Michigan when you lived here year-round.
Are your estate planning documents still going to be valid in your new state of residence? Do they need to be updated? The answer is maybe. Generally, under Article Four of the United States Constitution, every state shall give full faith and credit to the laws of every other state. This means that so long as your estate planning documents are not contrary to the laws of your new state of residence, they are generally valid.
This is especially true with contracts. If you have signed a contract in Michigan that is governed by Michigan law, that contract is generally effective in any state and could still be governed by Michigan law.
One type of a contract to which this applies is your living trust. Trusts are generally completely portable throughout the entire United States. You can choose which state law governs your trust. You can have a trust governed by Michigan law in any state of the Union. You can move to any state and not have to change your trust.
You may have your family or other loved ones still living in Michigan and it would certainly be easier for them if you had a Michigan trust. If you are in this situation, you can have your estate planning documents drafted/coordinated by a Michigan attorney. We regularly draft trust based estate plans for persons who are residents of other states, because the trusts are governed by Michigan law.
However, when you are a resident of another state, your other estate planning documents, such as your financial and healthcare powers of attorney and your will are generally not governed by contract law. These documents are generally going to be governed by the laws of your state of residence or the laws of the state in which you are located when you are trying to enforce them. Most states have specific statutes governing financial and health care powers of attorney and wills.
These laws for these documents may be similar to the ones in Michigan, but there are differences between states. For example, in Michigan you can have a self-proved will. If you have certain affidavits signed by the willmaker and the witnesses, the will is deemed to be self-proved. Other states do not have similar provisions. Wills prepared in another state may not qualify as self-proved wills in Michigan.
Similarily, with living will provisions in healthcare powers of attorney. I had a client in Florida several years ago who had a Michigan durable power of attorney for healthcare with living will provisions. In Michigan, life support can be removed upon determination by the patient advocate that the burdens of treatment outweigh the benefits. However, in Florida, life support could not be removed with this subjective standard. Life support could only be removed with a medically diagnosable standard such as in the event of an irreversible coma, persistent vegetative state or a terminal illness. If the patient advocate needed to remove life support with the subjective standard, the patient would need to be transported out of Florida.
Because of this, when we draft trust based estate plans for residents of other states, we work with attorneys in their home state. If you are a resident of another state, and want a Michigan trust based estate plan, you could have three options. In all options, you would have a trust that is governed by Michigan law. However, depending which option you choose, your financial and healthcare powers of attorney and your will could be compliant with the laws of your home state and/or Michigan.
Your first option is to have your financial and healthcare powers of attorney and your will be only compliant with the laws of your home state. You would choose this option if you spend very little time in Michigan or did not want to incur the cost of making your financial and healthcare powers of attorney and your will compliant with the laws of both your home state and Michigan.
If you do want your financial and healthcare powers of attorney and your will compliant with the laws of both states, and your home state and Michigan have similar laws, you could use option two. In that instance, you would have your financial and healthcare powers of attorney and your will drafted to be compliant with the laws of both states. This was more common a number of years ago. However, since Michigan has made a number of changes in the requirements of its laws in recent years, this option is usually not available and you would use option three.
In option three, you would have duplicate original sets of your financial and healthcare powers of attorney and your will. One set would be compliant with the laws of your home state and the other set compliant with the laws of Michigan. The Michigan set is used when you are in Michigan and the home state set is used when you are in your home state. If you were travelling, you would use either set which would be accepted in the state in which you were located.
If you move to another state and have estate planning documents that were prepared in your old state of residence, there may be portions of your documents that are unenforceable in your new home state. Whenever you move to a new state, at a minimum you should have your old estate planning documents reviewed to make sure they comply with the laws of your new home state.
Better yet and often times more economical in the long run, you could have new estate planning documents drafted, especially if your Michigan estate planning documents are more than five years old. There have been numerous changes in Michigan laws governing these documents within that time.
You want to make sure that your wishes are going to be followed so that you can stay in control of your property while you are alive and well, you can provide for you and your loved ones in the event of your mental disability, and when you are gone, give what you have to whom you want, the way you want, when you want.
By: Matthew M. Wallace, CPA, JD
Published edited September-October, 2012 in Savvy magazine as: In what state should my estate planning documents be drafted?