People commonly ask me whether their out-of-state wills and trusts are valid in Florida. It’s a simple question yet complicated.
Let’s suppose that you have a Will drafted in New York but die in Florida. If you’re still a New York resident, then there’s no problem. Your Will is probated in New York, and assuming the document complies with New York law, there should be no problems. This is true even if you own Florida real estate.
Taking this one step further, if you’re a New York resident who owns Florida real estate and your estate plan is Will based, it’s likely that two probate administrations will be necessary. A domiciliary proceeding in New York, and an ancillary proceeding in Florida. That’s because the disposition of the Florida real estate under a Will needs to be administered in Florida.
The same holds true in nearly every state. If you own property in your name and die, then there will likely be a probate proceeding of some sort, usually an ancillary proceeding, in the state where the real estate is located. The same is not true of bank and brokerage accounts. Those would be probated in the domiciliary administration, no matter the state where the bank and brokerage accounts are located.
To illustrate, assume Gino is a New York resident, and owns property in New York and in Florida. He also has stock brokerage accounts in New York and bank accounts in Florida. What kind of probate proceeding will be required? In this case, a domiciliary proceeding will be opened in New York, and those papers will be used to open an ancillary proceeding in Florida. The New York proceeding will govern the New York property as well as the bank and brokerage accounts in Florida and New York. The Florida probate proceeding will only govern the Florida real estate.
Now let’s say that Gino moves to Florida but dies owning the exact same assets. Gino should have updated all of his documents to Florida law. Why? Because Florida law is different than New York law to admit a Will to probate. So the attorney in Florida (unlike New York, an attorney is necessary to conduct a Florida probate,) will need to somehow verify the witness signatures of the New York Will to admit the Will to the Florida probate court. This will likely cause unnecessary expense and delay.
Also, if Gino named a friend who is not a Florida resident as his executor/personal representative, that friend won’t qualify under Florida law.
What if Gino has a revocable trust? Should he update his Trust to Florida law. Yes! There are differences between state law that may result in unintended and adverse consequence. This not to mention that the New York State Revenue Department is quite aggressive in taxing residents who believe that they moved to Florida but did not meet the New York requirements to escape their taxing authorities.
I wrote an entire whitepaper on escaping your former state’s taxing authority that you can access for free at https://floridaestateplanning.com/escape/ Generally speaking it’s easy to become a Florida resident. The difficult task is escaping your former state’s taxing authority. Many northeastern and some midwestern states don’t believe residents who say they’ve moved to Florida. So they impose stringent requirements that reel you back in for tax purposes. Read my whitepaper on the subject for an in-depth analysis.
What about durable powers of attorney, health care surrogates and living wills? Again, those documents should comply with the state of your residency. Even if you have a medical emergency in another state, the documents you have, if they’re up to date with your state of residency, should be valid in all states.
Even if you have documents drafted in the state in which you’re a resident, make sure that they’re up to date. Laws change, and your family and financial circumstances change. I can’t tell you the number of times a retired couple have me review documents that still name guardians for their children, when their children are in their thirties, forties, and fifties!
Federal tax laws change frequently. That’s one of the things about my profession. We must stay current with all the new laws. I spend dozens of hours a year attending continuing education courses, not counting the many hours reading applicable tax notices and trade journals.
If your legal documents have been gathering dust, or if you own property in more than one state, or if you’ve changed state residency, it’s time to update your plan.
©2022 Craig R. Hersch – Sheppard Law Firm. Learn more at floridaestateplanning.com