Estate Planning for Snowbirds
Considerations Before South for the Winter*
Can you believe Fall is just around the corner? Unfortunately, that also means cooler weather (personally, I prefer the mid-seasons of Spring and Fall). For many snowbirds, cooler weather means it is time to head south or southwest. If you are thinking about heading for warmer weather this winter, there are a few things you should consider before hitting the road.
What is happening in your destination state? Because we are still in the midst of a pandemic, it would be prudent to do some research about your winter destination. How many COVID-19 cases has the state had? Are these numbers trending upward? Upon your arrival, will the local or state government require that you quarantine for a period of time? Lastly, are there any additional local orders you should be aware of, such as a requirement that masks be worn indoors or restrictions on dining in restaurants?
Which state do you consider your home? Your state of domicile impacts your estate planning, family law matters, and taxes. Due to differences in state tests for determining residency, you can be considered a resident of more than one state; however, you can only be domiciled in one state. Although state laws differ as to determining domiciliary status, the common elements are that your domicile is where you permanently live and where you intend to remain or return.
Since you are spending time in two (or more) states, you should meet with your tax advisor to confirm that you are filing the appropriate tax returns and have a plan in place to maximize the potential differences in tax laws. For example, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have any personal income tax. You should also consider meeting with us to discuss the estate planning implications of owning properties in multiple states, especially if you own properties in both community and separate property states.
Have you reviewed your estate plan lately? Before you depart, locate and review your estate planning documents. Life changes are common and sometimes occur without warning. Having an up-to-date estate plan helps ensure that your wishes are carried out during your lifetime and upon your death. The following questions can help determine if your documents still meet your needs.
Do you still want your named fiduciaries (i.e., the trustee, personal representative, guardian for a minor child, and agents under a financial power of attorney or medical power of attorney) to act on your behalf, and are they still able to serve in that role?
Are your named beneficiaries still alive? Are there any additional individuals or charities you would like to leave something to? Do you want to make any adjustments to the amount of an inheritance or the manner in which you are leaving an inheritance to a beneficiary?
Do your beneficiary designations for retirement accounts and life insurance policies match the rest of your estate plan?
If you need to move for health reasons but cannot make the decision for yourself, does your agent have the authority to relocate you to another state?
Additionally, you may require assistance with financial matters or transactions while you are away. For this reason, you should review your financial power of attorney to determine if it is springing or immediate. A springing power of attorney allows your agent to act only when you are no longer able to act on your own (as determined by a physician or, in some instances, a judge). By contrast, an immediate power of attorney allows your chosen agent to act on your behalf right away, regardless of your current ability to act for yourself.
While reviewing your existing estate plan, you should evaluate whether it includes all of the necessary documents. If you currently have a will-based estate plan, it may be time to add a revocable living trust to your estate planning portfolio. This is especially important if you own property in more than one state. Without a trust to consolidate ownership and administration, your loved ones may end up going through multiple probate administrations in different states. This can increase the time and cost of settling your affairs upon your death.
Are your estate planning documents compliant in both states? Estate planning laws are state-specific and for certain documents, such as the financial power of attorney and healthcare directive, each state may have its own statutory forms. While it is possible for one state to honor a document that was validly executed in another state, it will be faster for medical personnel to honor your wishes in an emergency if your instructions are in a familiar form. We suggest that you have an attorney licensed in your second state review your estate planning documents for compliance, and if necessary, prepare a second financial power of attorney and healthcare directive. Most experienced estate planning attorneys work with colleagues in other states and can make a referral for you.
As you prepare for your upcoming travel, please do not hesitate to give us a call at 301.892.2713 or click here for an easy and convenient way to schedule your consultation. We are here to answer any questions and to make sure you are properly protected no matter where you may roam. In the meantime, here is a helpful Snowbird planning checklist.
For your safety and ours, we are still taking precautions and limiting initial consultations to videoconferencing. We know it is not the best way to begin a long-term relationship, but it is the safest. We look forward to hearing from you!
"Living with your bags packed!"
* Much of this also applies if you spend a good deal of time at a vacation home.