Estate Planning When You Live in Two States

By Peter J. Strauss, Esq., Senior Partner

Many people have homes in two states. Legally, you do not need separate estate planning documents for each state, but it may make sense from a practical perspective.

The Constitution of the United States requires that states give “full faith and credit” to the laws of other states. This means that your will, trust, durable power of attorney, and health care proxy executed in New York (Just to pick one state) should be honored in the state where you have a second home. That’s the law.

Recognizing ‘Out of State’ Documents

In practice, however, some states will not always recognize your “out of state” estate planning documents. While you should not need a separate will or trust for the state where you have the second home, this is particularly the case with your power of attorney and health care advance directives (health care proxy and “living will”).  Financial and health care institutions are accustomed to the documents used in their states, and may refuse to honor out-of-state documents. In the case of health care proxies, other states may call the document by a different name, such as “durable power of attorney for health care,” and sometimes they refer to the “agent” appointed in your New York health care proxy as the “surrogate” in another state. More importantly, if you are in an emergency room in Florida and your agent named in your New York proxy seeks to make a decision for you, the physician may say that the form needs to be reviewed by the hospital’s lawyer before she or he will follow your agent’s instructions.  Such delay can have serious consequenes.

When you do your planning, have your attorney in the state where you are creating your plan prepare a heath care proxy and power of attorney in the form generally accepted in the second state. Many states have “statutory power of attorney” forms and often health care advance directive forms (heath care proxies and “living wills”). Caution: some states have forms with provisions about when your living will shall take effect, which you may not approve of (ex. the living will becomes effective only when you are “terminally ill” or your “death is imminent”).

Be Proactive to Avoid the Courtroom

In the absence of effective health care advance directives, family members often must go to court to be appointed guardian or conservator, so they are able to make health care decisions. This causes delays, as well as expensive and unnecessary legal fees. So, if you do spend a good part of the year out-of-state, executing a health care proxy and durable power of attorney acceptable without question, in that state, is a good idea.

Tax and Medicaid Considerations.

Two other important notes: If you have a residence in a second state for income and estate tax planning reasons, make sure you comply with the necessary residency requirements so you will not be taxed in your state of origin.  And, if you are considering Medicaid because you may need Medicaid benefits to assist in paying for long term care, the rules for eligibility and availability of benefits vary from state to state and planning that will work in one state may not in the state of your second home. 

Pierro, Connor & Strauss assists clients in New York, New Jersey, Florida and Massachusetts and can provide counsel for the estate planning laws in other states. Our attorneys can review and modify your planning documents when there is a second residence, and ensure that potential problems are dealt with in advance of the time of an emergency. We also make sure that your “second state” documents appoint the same representatives as you appointed in your original planning documents, so that there’s no confusion or dispute about who should act for you when the time comes. Contact the Firm to schedule a free consultation by calling 1-(866)-951-PLAN or emailing, info@pierrolaw.com.