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Change of Domicile Planning Considerations

February 28, 2022 CSBB Blog

COVID-19 forced a substantial portion of employees to work from home. In what is becoming a common situation, companies are allowing the work-from-home model on a more permanent basis, and as a result people are finding themselves with the freedom to move away and live somewhere else while still maintaining their employment. 

A Florida and Palm Beach County estate planning attorney at Comiter, Singer, Baseman & Braun understands the issues of changing domiciles due to the freedom provided by work-from-home model employment and the laws surrounding estate planning and administration, as well as many related fields of Florida law, such as asset protection planning, estate litigation, probate, tax planning, guardianship, mediation, and business entities and transactions.

Estate Planning Considerations for an Out-of-State Move

If you are planning to move to a different state, or even if you already have, it is a good time to review and update your estate plan. You may see items that are no longer the best choice for some particular asset or set of assets and may need to revise your will, trust documents, powers of attorney, and health care directives.

Updating today is significantly likely to help avoid complications, and their related delays, if you become incapacitated or when your estate is ultimately settled, and may also have a substantial effect on your estate’s taxes. 

Will and Trust Documents

Check to ensure your will and revocable trusts will be valid in other states. Complications may arise if you refer to the laws of the state you’re leaving in your official documents. Your heirs may have to rely on that state’s laws to establish the validity of your will and trusts, and cross-state issues generally mean you’ll have to consult with lawyers in both states. Updating your estate plan when you move out of state solves this problem before it arises.

Your Executor

Questions for executors may also arise when moving to another state. For example, you should find out whether your named executor meets the specific executor qualifications under the laws in your new state. Even if it is legally allowed, does it make sense practically to keep the same executor? Out-of-state executors are sometimes required to post a bond, which can become difficult for executors to deal with the details from out-of-state. It can also become a time-consuming and expensive effort. A new local executor may be a better choice.

Healthcare Directives and Powers of Attorney

Advance health care directives, such as health care proxies and living wills, along with any type of power of attorney assignments should be updated regularly in any event, and always be updated after a move so you can be sure that they are uniformly consistent with your new state’s relevant laws.

Power of attorney designations should generally remain valid in your new state, but some third parties involved in the estate plan push back or delay documents that are not consistent with the new state’s statutory rules. Your powers of attorney should be reviewed when you move, and edited if necessary so that they will not become an issue when they become important.

Irrevocable Trusts

Whenever you, any trustees, or any beneficiary change domiciles by moving to another state, it can affect the tax ramifications of your irrevocable trust in that the trust statutes of any given state may factor in the domicile of these parties when making the determination as to whether the trust is subject to state income taxes. Changes may have to be made to minimize payable taxes. A Florida and Palm Beach County estate planning lawyer at Comiter, Singer, Baseman & Braun can help you understand and execute any change needed.

Retirement Plan Beneficiaries

Federal law generally governs retirement accounts, so you have to change anything if you move to another state. However, use this time to make sure your beneficiaries are on record with your employer and the financial institution that administers the retirement account. Also, if your beneficiary designation plan distributes the retirement assets to a trust created under your will or revocable trust, you may need to update your beneficiary designations.

Taxes and Domicile

“Moving” traditionally means that you intend to make your new state your legal domicile. Updating your legal domicile is a necessary task for income tax purposes. It is even more critical if you are moving to a new state. You also plan to maintain your former residence and visit it on a regular basis. There are states that may challenge your residency if you maintain residences in multiple states because each state wants to assess an income tax. It is important to establish ties with your new home state in order to provide evidence of your intent to make your new state your permanent home. This issue is even more important for people who are moving out of Florida because Florida imposes no state income tax. A Florida and Palm Beach County estate planning attorney at Comiter, Singer, Baseman & Braun can help show you how to avoid multiple state income taxes.

How Can Comiter, Singer, Baseman & Braun Help Me Update My Estate Planning Documents if I am Moving Out of State?

Speak with a Florida and Palm Beach County estate planning lawyer at Comiter, Singer, Baseman & Braun to discuss your out-of-state move. We will help you identify anything that needs to be changed and work with you to ensure those changes are done properly. Contact us today to learn more and get started.

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