06.07.23

Are trusts valid from state to state?


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Revocable living trusts help shelter estate assets from probate. They help to shield private finances from public scrutiny and provide additional control over the disposition of assets after their owner’s death. Trusts can also save money and minimize the time it takes to settle an estate. 

If you have a revocable trust as a part of your estate plan and you move to a different state, your trust should remain valid. However, if you are married and you move from a common law state to a community property state, or vice versa, you should be aware of this:

 

There are ten states that follow community property laws: Alaska, Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin.  In states that follow the community property law system, spouses share ownership of most property even if the property is titled in only one spouse's name.  That means, one spouse typically does not have the legal authority to bequest the other spouse's ownership interest to anyone.  In common law states, the property belongs to whichever spouse the property is titled to. 

 

Estate Taxes

Six states levy their own additional estate taxes in addition to the federal estate tax. If you’re moving to Iowa, Kentucky, Maryland, Nebraska, New Jersey or Pennsylvania, you will want to see how the state estate tax would affect your estate plan. 

If you are buying a new home, plan on adding that to your trust. If you overlook this, then your estate will have to go through probate, even though you have some assets in a trust. Additionally, any accounts with banks, brokerages, or other financial institutions that are part of your plan should be notified of your new address. The same goes for insurance policies.

The best rule of thumb is to review your estate plan and trust any time there is a big change in life, like a move, a divorce or marriage, or the death of a beneficiary.