Maybe. Although Arizona will generally recognize a will, trust, or powers of attorney validly executed in another state, there may be legal or practical considerations to ensure the most favorable outcome.
For instance, a client complained that a hospital rejected his parent’s power of attorney for health care decisions. If all they did was read the title of the document “Health Care Directive” (as I suspect was the case), Arizona medical providers may think that the document was a Living Will (aka Advance Directive), which is just instructions for end of life treatment, or even a Pre-Hospital Medical Directive (aka Do Not Resuscitate), not a power of attorney. However, once I actually read the document, I discovered that it was in fact a health care power of attorney, authorizing an agent to make all health care decisions for the person. Although the “Health Care Directive” document could legally be honored by Arizona health care providers, in practice it is reviewed by non-
legal professionals who may not be familiar with the difference in terminology or even take the time to read the document. This could delay or frustrate medical treatment when you need it.
The good news about updating your estate plan when you relocate to a new state is that the changes should be easy to make. You are not starting from scratch—you already made the most of the more complicated decisions in the estate planning process, such as how you wish to be treated in the event of your incapacity or death, who your beneficiaries are and how they are to inherit from you, and which type of estate planning vehicle best accomplishes your estate planning goals, such as a will or trust. Now the issues are simpler—how relocating affects your existing estate plan. Here are a few more common estate planning issues to consider when you move to a new state:
Different key players
- There may be some situations that are better handled in person rather than remotely, such as communicating with medical providers if you are hospitalized, finding and working with appropriate care providers/facilities, becoming a signor on your account at a local bank, or cleaning out your residence after your death or move into a care facility. It may be less burdensome and more effective to designate someone who lives in Arizona to make medical or financial decisions on your behalf, or at least designate someone in Arizona as an alternative in case the out-of-state person should resign.
- Situs determines taxation and which state laws govern your trust. It is based on where the trustee resides or trust property is located. If Arizona is your primary residence, it may be more effective to have Arizona designated as the situs of your trust. It can have tax benefits. And, local attorneys can more effectively assist you with trust administration if it is under Arizona laws they are more familiar with.
Update contact information
- Though your bank accounts, investments, retirement accounts, annuities or life insurance should be valid no matter where you live, they still need your updated contact information, of course.
- Now that you have relocated to a new state, you may have acquired new assets that might need to be addressed in your estate plan, such as a new home or bank accounts.
- Arizona is one of a handful of community property states. (California, New Mexico, Texas, Washington, Nevada, Wisconsin, Louisiana, and Idaho) Both spouses who reside in a community property state have equal rights by default to any assets or income acquired during a marriage (with the exception of gifts or inheritances), no matter who is designated as owner. In common law states (the rest of them), property acquired by either spouse during the marriage can be owned separately. If you move to Arizona from a common law state, your assets maintain their character as separate property. Maybe you prefer the assets remain separate property or maybe there are advantages to converting your assets to community property.
- While federal estate tax applies no matter which state you live in, it does not apply to most estates with the threshold estate size being at least $12.6 million in 2022. However, some states have an estate tax at a much lower threshold. With no estate tax from Arizona, there may be unnecessary tax planning in your estate plan that make it more complicated than it needs to be.
Mental Health Power of Attorney
- Arizona has a unique power of attorney for inpatient mental health treatment. We encourage all adult Arizona residents to have one, particularly for older adults or those with personal or family history of mental illness. We hope for the best that you never need it, but plan for the worst in case it is ever needed to avoid a potential mandatory guardianship through the courts.
Estate plans should be reviewed with a local estate planning attorney on a regular basis to identify any changes of laws or your circumstances, such as a move to another state, that may warrant updating your documents. A move is a good excuse to review your plan to make sure everything is up to date. Our experienced attorneys are happy to help you determine if you should update your estate planning, including when you move to Arizona.