Quite a few New Jersey residents own assets in different states or spend time traveling between two or more states. In such cases, estate planning can become complicated. The laws of one state may conflict with those of another, and assets can be bogged down as the courts try to determine how to move forward with the inheritance process. In addition, excessive taxation and fees can be incurred when multiple states are involved.
An example is found when one state has an inheritance tax while another does not. When the owner of a piece of property in the taxed state dies, his or her heirs could be forced to pay the inheritance tax. In some cases, it is possible to avoid this outcome by creating an LLC that will assume ownership of the property, but there are a number of considerations that must be made in order for that approach to be successful.
Another consideration involves health care proxies. Here again, state laws governing these documents vary, but many states will not accept a health care power of attorney that is drafted in another state. This can leave a loved one without the ability to direct the course of one’s care, which can be frustrating and stressful. In many cases, individuals who spend a significant amount of time in multiple states should have health care directives drafted for each jurisdiction.
When considering how one’s estate planning efforts will be applied across state lines, it is important to remember that each and every New Jersey family is unique and will have its own set of needs in this regard. By working with an estate planning attorney, it is possible to ensure that assets are passed down with the least possible amount of tax ramifications. It is also possible to be assured that one’s incapacitation planning is adequate in all applicable states.
Source: financial-planning.com, “Estate Planning Headaches to Avoid When Clients Assets Span State Lines“, Allen Falke, Sept. 15, 2015