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Monday, November 23, 2015

Basic Facts about Protecting Your Estate If You Relocate

What estate planning facts should be considered when you relocate?

Life, as we all know well, but manage to deny a good deal of the time, is unpredictable. You may have engaged in careful estate planning, keeping in mind all the things you've been told are essential: to avoid probate by having a will, to set aside significant assets for those you love, to protect your assets from taxes as much as possible. Nonetheless, unexpected events can impact your careful planning and you have to be prepared to handle change.

 

One significant life event you may not have prepared for is a change of location. Economic, work-related, or familial reasons may cause you to make a geographical move. Even though you have been assured that "most likely" your documents will remain legally enforceable in the new jurisdiction, you want to make absolutely certain that this will occur. This is the time to consult with a local estate planner who can help you to review your existing plans and make any necessary changes.

Things to Consider

It is important to remember that although most laws are consistent throughout the country, some are not. There are, for example, common law states and community property states. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska is an opt-in state in which both parties have the choice of making their property community property by signing an agreement to that effect.

In community property states, all money earned by either spouse during a marriage, all property bought with those earnings, and all debts incurred during that marriage belong equally to both parties. Unless otherwise established in a will, when one spouse dies, the other half of everything owned by the couple goes to the surviving spouse.

When you relocate, it is necessary to take the laws of the state you are moving to into consideration. In common law states (the other 40 not previously mentioned), property ownership is determined by whose name is on the document of ownership, such as a deed or a title. In such states, you are free to leave your property to whomever you choose, although your spouse has the right to claim a certain share after your death.

Written agreements, such as prenuptial or postnuptial documents can separate some or all of community property. If a couple holds title to property jointly, they may be able to avoid probate court proceedings when one spouse dies.

Differing Tax Thresholds

Some states tax the estate of the deceased while others tax the inheritance once it is received by the heirs. All states, however, allow spouses to inherit tax-free. While the federal government taxes estates worth over $5 million, individual states may have higher or lower thresholds. In many cases, gifting, creating trusts and allocating assets are perfectly legal ways of protecting your estate.

In all cases, a geographical relocation necessitates a comprehensive meeting with a reputable estate planning attorney to ensure that your estate will remain protected and will be distributed according to your wishes after your death.


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