Relocating across state lines can certainly raise questions about the continued validity of an existing trust, but generally, a properly drafted trust *will* remain valid even after the grantor (the person who created the trust) moves to a new state. However, it’s not always that simple, and several factors come into play. The key is understanding that trusts are governed by the laws of the state where they were *originally* established, at least for a period of time, but those laws may not always align with the new state’s regulations. This can create complications regarding taxation, asset protection, and even the administration of the trust itself. A well-considered trust document anticipates potential changes in residency and includes provisions to address such scenarios. Roughly 60% of Americans will move at least once in their lifetime, highlighting the importance of this consideration in estate planning.
What happens to trust taxes when I move?
Tax implications are often the first concern when a grantor moves. Each state has its own rules regarding income tax, estate tax, and generation-skipping transfer tax. A trust established in a state with no income tax, for example, may suddenly be subject to income tax in the new state if the grantor is now a resident there. Similarly, the estate tax exemption amounts vary significantly from state to state. In 2023, for instance, the federal estate tax exemption was $12.92 million per individual, while some states have much lower thresholds, or no exemption at all. “It’s not just about the initial creation of the trust; it’s about the ongoing maintenance and ensuring it remains compliant with the laws of both the original state and the new state of residency,” explains Steve Bliss, a Wildomar estate planning attorney. This means potentially filing tax returns in multiple states, and understanding how those states treat trust income and distributions.
Can my trust lose its asset protection benefits if I move?
Asset protection is a significant reason many people create trusts, particularly irrevocable trusts. However, the level of protection offered by a trust can vary dramatically depending on the state. Some states, like Nevada and Delaware, are known for having particularly strong asset protection laws, while others offer very little. If you move from a state with strong protections to one with weak protections, your trust’s ability to shield your assets from creditors could be compromised. I recall a client, Mr. Henderson, who established an irrevocable trust in Nevada years ago. He moved to California, confident his trust would remain protected. Unfortunately, California’s laws didn’t offer the same level of protection, and a subsequent lawsuit resulted in a significant portion of his trust assets being seized. It was a difficult lesson learned about the importance of understanding state-specific laws.
What if my trustee still lives in the original state?
Even if the grantor moves, the trustee’s location can also be a factor. The trustee has a fiduciary duty to administer the trust according to its terms and applicable law. If the trustee continues to reside in the original state, they may be subject to that state’s laws regarding trust administration, even if the grantor is now a resident of another state. This can lead to conflicts of law, particularly if the two states have different rules regarding investment restrictions, distribution requirements, or accounting practices. It’s crucial to ensure that the trustee is aware of their obligations under both sets of laws, and to potentially seek legal counsel to navigate any complexities. A properly drafted trust should address the possibility of a trustee relocating, and provide guidance on how to resolve any conflicts that may arise.
How did proactive planning help the Davies family?
The Davies family provides a great example of how proactive planning can prevent problems when moving across state lines. Mrs. Davies, a long-time client, informed Steve Bliss of her intention to move from California to Florida. Before the move, they meticulously reviewed her existing trust, updated the provisions to reflect her new residency, and consulted with a Florida attorney to ensure full compliance with that state’s laws. They also addressed the tax implications, investment strategies, and the potential impact on beneficiaries. Several years later, when Mr. Davies passed away, the trust seamlessly transitioned, and the beneficiaries received their inheritance without any complications. “The key is to treat a move across state lines not as an afterthought, but as an integral part of your ongoing estate planning process,” Steve Bliss often says. By anticipating potential challenges and taking proactive steps, the Davies family avoided the pitfalls that can plague those who fail to address these issues.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- estate planning attorney near me
- family trust
- wills and trusts
- wills
- estate planning
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “What happens to my debts when I die?” Or “What happens when there’s no next of kin and no will?” or “Does a living trust protect my assets from creditors? and even: “Do I need a lawyer to file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.