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For example, if you are a California resident and you move to Nevada and you do not execute an amendment saying that the "situs" (location) of the trust and the law to be applied are now both Nevada, any income the trust receives after your death could be taxed by California.
Sometimes more than one state tries to tax the same living trust. It is therefore extremely important when you move to a different state that you have your living trust reviewed and the "situs" and law changed. This is even more important when you move to one of the eight states that do not have income tax: Alaska, Florida, Ohio, Nevada, South Dakota, Texas, Washington and Wyoming.
Besides income taxes, some people have to worry about death taxes.
The Federal Estate Tax takes up to 46 percent of a person's assets at death. However, every person has an exemption of $2 million this year and $3.5 million in 2009. There are no Federal Estate taxes in 2010, but the exemption is scheduled to decline to $1 million in 2011. Some 24 states have their own death taxes.
So again, the "situs" and law should be changed if you move to a state which does not have death taxes.
Sometimes you can go to great lengths to get your trust out of the clutches of the state you left only to have it taxed by that state because your successor trustee lives there. You may need to choose a different trustee.
States have different laws which may benefit or hurt you. Eighteen states say trusts can last forever, while the rest say they must end at a specific time.
Some states allow protection from creditors while others do not. Some states have greater privacy protection than others.
Have your estate planning documents reviewed as soon as possible if you created them in one state and moved to another.
All trusts drafted before 2005 should be reviewed anyway because of the 2004 privacy law called HIPAA.
Frank Spees graduated from UCLA with his Doctorate in Law and Masters in Business Administration and has been practicing law for 24 years with his wife and law partner Judy Spees.
Spees & Spees have been North Tahoe residents for 20 years and limit their practice to Living Trusts, Estate Planning, and Probate.
If you have any questions about the information contained in this article, call Frank and Judy at (775) 832-7006.
Sometimes more than one state tries to tax the same living trust. It is therefore extremely important when you move to a different state that you have your living trust reviewed and the "situs" and law changed. This is even more important when you move to one of the eight states that do not have income tax: Alaska, Florida, Ohio, Nevada, South Dakota, Texas, Washington and Wyoming.
Besides income taxes, some people have to worry about death taxes.
The Federal Estate Tax takes up to 46 percent of a person's assets at death. However, every person has an exemption of $2 million this year and $3.5 million in 2009. There are no Federal Estate taxes in 2010, but the exemption is scheduled to decline to $1 million in 2011. Some 24 states have their own death taxes.
So again, the "situs" and law should be changed if you move to a state which does not have death taxes.
Sometimes you can go to great lengths to get your trust out of the clutches of the state you left only to have it taxed by that state because your successor trustee lives there. You may need to choose a different trustee.
States have different laws which may benefit or hurt you. Eighteen states say trusts can last forever, while the rest say they must end at a specific time.
Some states allow protection from creditors while others do not. Some states have greater privacy protection than others.
Have your estate planning documents reviewed as soon as possible if you created them in one state and moved to another.
All trusts drafted before 2005 should be reviewed anyway because of the 2004 privacy law called HIPAA.
Frank Spees graduated from UCLA with his Doctorate in Law and Masters in Business Administration and has been practicing law for 24 years with his wife and law partner Judy Spees.
Spees & Spees have been North Tahoe residents for 20 years and limit their practice to Living Trusts, Estate Planning, and Probate.
If you have any questions about the information contained in this article, call Frank and Judy at (775) 832-7006.
