Why Americans on the Move Need to Review Their Estate Planning Documents
The constant movement of Americans across state lines is a fascinating phenomenon, with nearly 7.9 million people relocating each year. However, this dynamic lifestyle often leads to a critical oversight: the neglect of estate planning documents. According to experts, failing to update these documents can result in significant legal and financial complications, potentially derailing carefully crafted plans.
A 2025 Caring.com survey reveals a concerning trend: only 24% of Americans possess a will, and an even more alarming statistic emerges. Nearly a quarter of respondents haven't updated their estate planning since its inception, and 11% have moved away from the state where their initial estate planning was established. This lack of attention can have severe consequences.
The complexity of inheritance, healthcare directives, and powers of attorney (POAs) laws varies significantly from state to state. Estate documents that don't comply with the laws of the state where you reside may be unenforceable, leading to your wishes being ignored. Differences in laws can also impact income tax, state estate or inheritance tax, and marital property, making the plan less efficient and less favorable for your heirs.
Tasha Dickinson, a trusts and estates lawyer at Day Pitney, emphasizes the importance of state statutes in these documents. She states, "Documents that might be relied on in times of need, such as healthcare surrogates, living wills, and POAs, are creatures of state statute."
So, what's the solution? Do you need to start from scratch with a new set of estate planning documents? Not necessarily, according to experts. Legal documents like wills are generally valid across state lines, but it's advisable to have a lawyer in your new state review them for practical considerations.
Dickinson highlights the nuances in state laws that may require attention, particularly in ancillary documents like powers of attorney. She recommends updating these documents to ensure compliance.
Here are some key points to keep in mind:
Property: Community property state laws differ significantly from non-community property state laws. Patrick Simasko, an elder law attorney and financial adviser, advises, "It's crucial to sit down with a lawyer and have these documents reviewed to ensure compliance."
Community Property: In states with community property laws, both spouses have equal ownership rights to income and assets acquired during the marriage. Upon one spouse's death, the surviving spouse automatically receives the other half. A house is revalued at fair market value or receives a full step-up, avoiding capital gains tax if sold immediately. Nine states—Idaho, New Mexico, Texas, California, Arizona, Wisconsin, Nevada, Louisiana, and Washington—adhere to community property laws.
Non-Community Property: In non-community property or common law states, any property or debt acquired during the marriage is owned by the spouse who obtained it and can be left to anyone they choose. If the house is jointly owned, the surviving spouse inherits it, but only the deceased spouse's half receives a step-up in value.
Powers of Attorney and Advance Directives: These documents should remain valid, but states typically have their own statutory and specific forms. Dickinson advises, "If a decision needs to be made for you, it's best to have family members who are familiar with the document to avoid potential disputes with medical professionals."
Executor of the Will: Your will remains valid across states, but states may have unique rules regarding the executor. For instance, if you move to Florida and name a non-Florida resident as the executor or personal representative, that person must be a relative or disqualified. Dickinson warns, "Failing to name a qualified individual can lead to significant problems."
In conclusion, Americans on the move must recognize the importance of reviewing and updating their estate planning documents to ensure their wishes are respected and their heirs are protected, regardless of their state of residence.
