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Estate Planning and State Law

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  • Avatar Franky 
    Participant
    Status: Physician
    Posts: 10
    Joined: 03/11/2017

    Hello,

    General question about estate planning.  I understand that estate planning is largely a creature of state law, but which state?  My parents live in Michigan and own their primary residence there (along with some other assets), but they also own a rental property in California and plan to hopefully move there after retirement and live in the California home.   Presumably, they will sell the Michigan home at that time. They are in the process of starting their estate planning, should the trust be established in CA or in MI?  I assume it makes a difference?  If so, can one establish a trust in one state, while still residing in another?

    Thank you!

    #50403 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7306
    Joined: 01/09/2016

    Real estate probate is always governed by the state where the property is located, even if the deceased does not live there. It can be a real headache for an executor because s/he will almost certainly have to go through 2 probates – one where the deceased lived and ancillary probate in the state the real estate is in. They need to consult with an estate planning attorney in MI who perhaps has some connections in CA and/or is in a group with an attorney who is dually-licensed (MI and CA). The best way to avoid ancillary probate is to put the out-of-state realty into a trust, but I will defer to the advice of the E&T attorney’s advice beyond that.

    They will need to make changes to their LWTs when they move to CA as they would be moving from a non-CP (Community Property) state to a CP state.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #50408 Reply
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 1856
    Joined: 09/16/2016

    A good estate planning attorney wherever they live should be able to answer all of those questions for them.

    You can generally create a trust with the state of your choosing but each jurisdiction will have its own rules governing how you go about doing that.

    LEVEL 1 WCI FORUM MEMBER.

    #50540 Reply
    Avatar StarTrekDoc 
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    Status: Physician
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    Joined: 01/15/2017
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    My parents moved from MI to CA.  They updated their trust and didn’t appear to have much needed to be done.  They sold their property within a year of moving in MI, so I don’t know what holdings it was under aside already being in the Trust (ie held as CP vs Tenants vs whatever).   Here in Cali I know it’s CP and under Trust since I setup the purchase and paperwork for them.   The Trust itself didn’t change crossing state lines.

    #50547 Reply
    Avatar Franky 
    Participant
    Status: Physician
    Posts: 10
    Joined: 03/11/2017

    Thank you very much everyone, super helpful.

     

    #51324 Reply

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