If I Move to Another State Do I Need to Update my Documents?
It’s a common question we get from clients who intend to move out of New Jersey. We also get calls from people moving to New Jersey who want us to review estate planning documents prepared in another state. These documents may include wills, powers of attorney, health care directives and trusts.
Do these documents need to be updated simply because of a change in residency? While there isn’t one answer that fits everyone there are a common set of questions. First let’s consider the power of attorney and health care directive.
Each of these documents is controlled by state law. The power of attorney typically allows a principal to designate an agent to make decisions and carry out financial tasks on behalf of the principal. The health care directive designates a health care representative to make decisions for the declarant and may also include an instruction directive (commonly known as a living will), which provides instruction and direction (typically in an end of life situation) regarding the declarant’s wishes for health care if the declarant in the future lacks decision making capacity and cannot communicate those wishes.
As long as these documents are executed in accordance with New Jersey law they should be honored, however, if you move to or from another state, in which the laws of that state relating to powers of attorney and health care directives may differ from New Jersey’s, you just might run into problems.
For example, New Jersey’s power of attorney law says that in order for the agent to make gifts to him or herself, the document must specifically authorize it by stating that “the agent has authority to make gifts including to the agent”. If the document does not make specific reference to the agent then that agent could make gifts, just not to the agent. A power of attorney executed in another state may not have that language if it is not required by law or if the law implicitly allows for gifts to the agent.
One could argue that if the power of attorney complied with that state’s law, then such a gift by the agent should be allowed here in New Jersey. When presenting the document to a New Jersey financial institution, however, it’s legal department may reach the opposite conclusion and not permit such a transfer. Rather than try to determine the risk that this situation may arise in the future, we usually recommend updating the power of attorney to avoid any such possible problems.
But, what about wills or trusts? Next week we’ll answer that question.