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Estate planning and state-to-state moves

For those in New Jersey who have completed the estate planning process, a great sense of security can come from knowing that one’s final wishes are provided for within a legal format. It is important to understand, however, that these documents will need to be reviewed and revised from time to time. Estate planning is best thought of as an ongoing process, rather than a one-time item on one’s to-do list. Significant life events trigger the need to reevaluate one’s documents, and a family move from one state to another is one such event.

In terms of one’s will, most wills are valid in any state, regardless of where the document was drafted. However, state laws vary, and problems can arise when a will references the laws of one state that differ from those in the new state of residence. This is especially true if the will is challenged in court.

Another issue involves the designation of assets as community property. Ten states recognize assets as community property, which allows a surviving spouse to avoid paying capital gains tax on the sale of certain appreciated assets. For jointly owned assets that are not considered community property, a surviving spouse who sells these assets shortly after the death of a spouse will be subject to capital gains tax levied on one half of the appreciation value of such assets. Therefore, having the ability to characterize assets as community property is an important estate planning tool, especially when a couple moves to a new state.

For those in New Jersey who are planning a move, it is important to take the time to research the estate planning laws in both the current state of residence and the new location. In many cases, certain aspects of one’s existing plan can be tweaked or altered to ensure the highest level of asset protection possible. Once that process is complete, couples can focus on their upcoming move, knowing that their estate plan is current and in line with their wishes.

Source: The Spectrum, "State-to-state estate planning creates issues", Scott Halvorsen, May 22, 2014

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