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Split Time Between Two States In Retirement? How Should You Handle Your Estate Planning?

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If you've recently joined the ranks of retired "snowbirds" who spend the colder months of the year in a more southern climate, you may have already met with your accountant or financial adviser to discuss the various advantages and potential pitfalls of having residences in more than one state. However, one important area that is often overlooked in these discussions is that of estate planning. If you -- like more than half of Americans aged 55 to 64 -- don't yet have a will, and especially if you are maintaining two residences in different states, your surviving family members may find themselves with a mess on their hands upon your untimely death. Read on to learn more about the factors you'll want to take into account when drafting your last will and testament as a snowbird. 

If you pass away without a will, which state's laws will govern the distribution of your property? 

While those who executed valid wills in their "home states" during their working years should be able to have these wills executed in any other state, those who pass away without a will in place may face a tougher battle. Each state sets forth its own laws addressing how property and assets are distributed for those who die "intestate" (without a will), generally known as intestate succession laws. Because some are happy with the way their state's intestate succession laws would distribute their property, they may view a will as unnecessary -- but moving to another state could subject you to a different set of intestate succession laws that may not be as satisfactory. Some states will also assess taxes on estates over a certain size, making it beneficial to execute a will in a state without such taxes (or designing your will so that your final estate value falls below this threshold amount). 

Even if you've not officially changed your residence from your home state to your sunnier southern state, if you pass away while residing outside your home state, your intestate distribution process may begin there. If this is the situation, your surviving family members could find themselves embroiled in a legal battle to transfer the probate of your estate back to your home state, eating up estate assets in legal fees and other costs before distribution to heirs has even begun. 

What should you keep in mind when planning your estate distribution from outside your home state? 

Although those with streamlined assets or multiple payable-on-death accounts may not need to seek legal advice when engaged in estate planning, for those living in more than one state, seeking counsel is a must. Ideally, you'll want to find an attorney (or law firm) admitted to practice in both your home state and your new state, as this will ensure you're getting solid advice from someone experienced in both state's estate laws. 

You'll also want to consider factors like estate taxes. If only one of the states in which you reside assesses these taxes and you expect your assets to only increase between now and your death, it's generally a good idea to execute your will (and maintain your primary residence) in the state without estate tax.

Finally, you'll want to give some thought to your final wishes as they relate to medical care. If you already have an executed medical power of attorney or "living will" in your home state, it should be effective in your new state as well -- but having a separate document drafted in the form used in your new state may be a better idea to ensure consistency and prevent confusion. 

Talk to your lawyer to learn more about how living in two states can affect the way your property is distributed after your death.