Your Estate Planning Documents When You Move

This past week, I was asked by a former Missouri resident now living in Michigan if her will and powers of attorney drafted in Missouri are good in Michigan. Without having reviewed the documents, I had to say it depends.

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 the current state you are in, they are generally valid.

This is true not only if you move, but also if you are just visiting another state. For example, if you are Michigan resident and live here except in the winter months, when you head south to a warmer state such as Arizona or Florida, and you have your will and financial and health care powers of attorney drafted in Michigan.

Most states have similar laws regarding these estate planning documents. They will generally be honored to the extent they are not inconsistent with the laws of the state you are in. For example, there are certain circumstances in which you can “pull the plug” at end of life in Michigan, that Florida will not allow, even if your Michigan documents provide for it.

The rules are slightly different 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. A trust is a contract in which you the trustmaker, creates and controls the trust and enters into an agreement with you the trustee, who manages the trust for the benefit of you the beneficiary, who receives trust assets how and when you choose.

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 moved out of Michigan, however 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 and governed by Michigan law.

However, when you are a resident of another state, your other estate planning documents, such as your financial and health care powers of attorney and your will 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 health care powers of attorney and wills.

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 to be governed by Michigan law. We then coordinate the drafting of your financial and health care powers of attorney, anatomical gift/organ donation, will, and any other state-specific documents with your estate planning attorney in your home state/country.

If you are a resident of another state and spend time in Michigan, your home state documents such as your financial and health care 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. For example, Michigan law requires your financial agents under your financial power of attorney to sign a multi-paragraph acknowledgment. Other states do not have that same requirement.

Years ago, Michigan and other states had more similar laws and more similar documents. However, there have been a number of 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 in 2008 and the passage of the Dodd-Frank Act, financial institutions are reviewing financial powers of attorney with a higher level of scrutiny than ever before.

If you spend substantial amounts of time in more than one state, you may want to consider a set of financial and health care powers of attorney compliant with the laws of each of the states in which you spend time. Your agents would use the powers of attorney of the state in which you were than currently located. 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 in your new home state. 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, all at the lowest possible overall cost to you and your loved ones.

By Matthew M. Wallace, CPA, JD

Published edited December 3, 2017 in The Times Herald newspaper Port Huron, Michigan as: Moving to a new state can affect your financial planning

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