If you plan to retire and either move or away from Rhode Island, its a good idea to speak with your estate planning attorney about the estate laws in the state to which you are moving.
Of course, your estate plan should be updated any time you make a major change, such as buying or selling real estate. But even if you’re not buying or selling anything, it’s wise to review your estate plan when you move because different states have different laws about how estate documents are interpreted.
For instance, New Yorker Rosanne McGathy wrote a will in 1997. She moved to Arizona in 2005, and she passed away several years later. Her will made specific bequests to several trusts for relatives, and left the remainder of her estate to some other relatives and charities. McGathy had other assets that went to people outside the will, including a home she co-owned, a life insurance policy, and an annuity.
Under New York law, if a will doesn’t specifically say who pays the estate taxes, then the taxes are apportioned among all the assets, including the trusts, the home, the life insurance and the annuity.
Different states have different rules about how estate plan documents are interpreted, so if you’re thinking of moving elsewhere, you should review your estate plan.
Under Arizona law, however, all the taxes have to be paid out of the remainder of the estate – and no taxes would be charged against the trusts or the assets that went to people outside the will.
The various beneficiaries went to court over who had to pay the estate taxes. The Arizona Court of Appeals ruled that Arizona law applied, so the relatives and charities that received the remainder of the estate had to bear the entire burden of the taxes, while the other beneficiaries didn’t have to contribute anything.
Rosanne could have avoided all this family strife and litigation simply by reviewing her estate plan when she moved, and specifically saying in her will how she wanted the estate taxes to be apportioned.