EP Drafting State & EP Docs When You Move

You may spend your summers in Michigan. In the colder months, you then head south to a warmer state such as Arizona or Florida. You have your will, financial power of attorney, healthcare power of attorney and maybe a trust. But in what state were they prepared?

Will your estate planning documents be effective in Michigan when you are here and effective in the other states in which you spend time. 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 current 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 successor trustees 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 trust and related documents drafted by a Michigan attorney. 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 necessarily governed by Michigan law.

These other estate planning documents are generally going to be governed by the laws of your state of residence and/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 healthcare powers of attorney and wills.

The laws for these documents may be similar to the ones in Michigan, but there are differences between states. For example, in Michigan, if you have certain affidavits in your will signed by you, the witnesses and a Notary Public, the will is deemed to be self-proved. Other states do not have similar provisions. Wills prepared in other states may not qualify as self-proved wills in Michigan.

Similarly, with living will provisions in healthcare powers of attorney. In Michigan, life support can be removed by your patient advocate in circumstances that you designate. Life support could be removed with a medically diagnosable objective standard such as in the event of an irreversible coma, persistent vegetative state or a terminal illness. You can also include a subjective standard such as upon determination by your patient advocate that the burdens of treatment outweigh the benefits. However, all of those standards are not allowed in all states.

For example, I had a client in Florida several years ago. At that time, life support could not be removed in Florida under the subjective standard. Life support could only be removed with a medically diagnosable objective 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 using the subjective standard, the patient would need to be transported out of Florida to Michigan or another state that would allow such a decision to be made.

We regularly coordinate the drafting of estate plans for clients who reside in other states or even other countries when they want Michigan successor trustees administering a Michigan trust. If you are a client residing outside Michigan, we work closely with your estate planning attorney in your home state/country.

In such situations, we draft your revocable living trust and related documents which are governed by Michigan law. We then coordinate the drafting of your financial and healthcare powers of attorney, anatomical gift/organ donation, will, and any other state-specific documents with your estate planning attorney in your home state.

If you spend time in Michigan, your home state documents such as your financial and healthcare powers of attorney may not offer all of the options that are available in Michigan. Or your agents may meet with resistance when trying to use these documents in Michigan because they are not compliant with Michigan law.

In years past, this was not such an issue because Michigan and other states had similar laws and similar documents. We used to be able to easily make your financial and healthcare powers of attorney compliant with both states’ laws. However, we are finding it increasingly difficult to do this.

Firstly, there have been recent changes in Michigan and other states’ laws making them less similar. Additionally, we have found that after the implementation of the Patriot Act and other Federal “anti-terrorist” legislation and after the mortgage meltdown within the last several years, financial institutions are reviewing financial powers of attorney with a higher level of scrutiny than ever before.

Instead of attempting to make your financial and healthcare powers of attorney compliant with the laws of both your home state and Michigan, we have duplicate original financial and healthcare powers of attorney prepared. One set of financial and healthcare powers of attorney is prepared by your home state estate planning attorney and is compliant with the laws of your home state. We prepare the other set of financial and healthcare powers of attorney which is compliant with the laws of Michigan.

When your agents are in your home state, they use your home state powers of attorney. When your agents are in Michigan, they use your Michigan powers of attorney. This increases the likelihood that your wishes would be followed.

If you move to another state or if you spend more time in another state which changes your state of residence and have existing estate planning documents which 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 change your state of residence, 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. This is especially true if your existing estate planning documents are more than a couple of years old.

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, 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 Wallace, CPA, JD

Published edited June 29, 2014 in The Times Herald newspaper, Port Huron, Michigan as: What state law governs your estate planning documents?

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