Are My Out-of-State Estate Planning Documents Valid?

Moving to the great state of North Carolina?  Do you already have estate planning documents in place? Will your estate planning documents be applicable in the new state? The great legal answer is, it depends. The bottom line is that anyone who moves to another state should have their documents reviewed. Under the U. S. Constitution, each state is required to give full faith and credit to public acts, records, and judicial proceedings of other states. So your documents should be valid—but that is not necessarily the case. Your Last Will and Testament is one such document that can be effected by moving to a new state.

Even with Full Faith and Credit, your out-of-state Will might be valid for some purposes and not others. Most States execute Wills with the similar validity requirement. However, North Carolina requires magic language other states don’t require. NC language states that the signer is over eighteen (18) years of age, of sound mind, and not being unduly influenced. If those magic words do not appear in the Will, then most clerks in North Carolina will not probate that Will and, if they do, the Will won’t hold up for purposes of real estate transfers. Real estate is unique to each State and does not fall under the “full faith and credit” rule, so if the Will is not valid under North Carolina’s standard then it will not allow any real estate transfers by virtue of that Will.

For example, Wendy, a resident of Maryland, owned real estate on the Outer Banks. Wendy had her estate planning documents done by an attorney in Maryland, but Wendy’s Will did not meet North Carolina’s standard. Since the Will did not have North Carolina’s magic words, the Will was not valid to transfer Wendy’s property on the Outer Banks. The North Carolina clerk refused to probate, forcing the family to do an ancillary estate based on the absence of a Will. Probating intestate (which means without a will) is not a good result for most families, but it was the only option since Wendy had a Will-based plan that did not meet North Carolina’s standard. If you own property in a different state, it’s important to consider revocable trusts; which allows you to avoid multiple probates. A Will-based plan requires a probate in each state you own real estate; so if you own property in three (3) states, you must probate three times.

A general Power of Attorney from another state will typically be applicable in North Carolina, although many are difficult to us in NC because of references to out of state laws.  Often people use what’s called a short form power of attorney, which is generally a one to two-page document, around thirty (30) lines, that allows you to initial next to the authorities you want to give to your agent. This type of document is common among general practice attorneys; however, the document is misleading. Each line you initial relates to a paragraph in the State’s general statutes; and that paragraph limits the agent’s authority. For example, a line on its face might allow your agent to handle real estate transactions, but the paragraph in the statute limits your agent’s ability to buy and sell property. It’s difficult to use a document from another state that has language relating to unique statutes.

Health care documents tend to be applicable from one state to the next except it causes delays. If you go to a hospital in North Carolina and have a Health Care Power of Attorney made in another state, often times the hospital has to wait for their legal department to verify you have the authority. This delays your agent in making medical decisions on your behalf.

If you move to a new state and plan to stick around for a while, it’s always best to have local documents or to at least have your out-of-state documents reviewed. You want your documents to work every time.

 

If you have questions about elder law, asset protection or retirement planning, consider W.G. Alexander & Associates—we are experienced attorneys who offer a unique blend of asset protection, Elder law and estate planning. You can also attend our free seminars. Learn more through our website at www.wgalaw.com, or call us at (919) 256-7000.

Attorney Bill Alexander of W.G. Alexander & Associates discusses these issues and more every Saturday morning on his radio program, “Asset Protection Today,” on TalkRadio 680 WPTF (AM). Be sure to listen from 11:00 AM – 12:00 PM.