Adjusting Your Estate Planning Documents When Moving to a New State

Moving to a new state may impact your legal status in a number of ways, including how your property is held and how your marriage and family matters are handled. Upon relocation, it is likely that your estate planning documents will need to be reviewed and revised. Each state has its own laws governing the creation and administration of wills, trusts, powers of attorney and health care directives. While these documents are still lawful if created in accordance with the laws of the state in which they were formed, their applicability in a new state may be uncertain and may require a court ruling.

Wills. Each state has a particular set of rules relating to various aspects of will formation and administration. While your will is probably valid in a new state, there are some areas of will construction that can present a problem. For example, inheritance rules, the laws of intestate succession, estate or inheritance taxes, and the criteria to serve as an executor vary from state to state. One area that likely needs to be addressed concerns marital property rules. Married individuals who move between community property and common law states face different laws regarding ownership rights over property. It is advisable to make new wills so the property you own and/or share with your spouse is treated as you intended.   



Trusts. Like wills, trusts are governed by laws that differ among states. In addition, each state may adopt its own version of the Uniform Trust Code, a set of model laws on trusts, which does not provide uniformity among states. Updating your trust to reflect and incorporate the laws of your new home state is a sensible idea, particularly if you purchase property in the new state that you intend to include in the trust.

Powers of attorney and health care directives. States maintain their own powers of attorney and health care directive forms that often differ in terminology and format. For example, California uses a single form known as an advance health care directive that combines a power of attorney for health care and a living will, while other states do not. To avoid uncertainty as to whether these forms will be accepted in the new state of residence, it is important to review these documents with an attorney and re-execute them if necessary.  

Converting Your Business to a Different Structure

Over time a business may need to alter its structure to conform to different needs or an evolving business environment. In some cases, you may decide that a different structure offers certain advantages that will be beneficial to the growth of your business. The business structure you choose will determine several key features of your operations including regulatory requirements, liability protection and taxation matters. 

A business that elects to form a limited liability company (LLC) has certain administrative and financial obligations. As an LLC, the business is required to draft and submit articles of formation and an operating agreement.  LLCs must also elect their management structure, namely choosing between either a member-managed or manager-managed LLC. Whether it will be taxed as a partnership or a corporation is another important consideration for LLCs. One of the greatest benefits of LLC status is the personal limited liability protection afforded to its members.  

If a business converts from a corporation to an LLC in California, it can take advantage of the streamlined procedure known as statutory conversion. This process allows a business to change its structure automatically to an LLC by filing a document with the Secretary of State. This process concurrently transfers the corporate assets and liabilities into the LLC. A business owner can avoid numerous administrative filings and actions, including dissolving the corporation separately, by employing this process.  

Alternatively, a business may choose to convert from an LLC to a corporation to obtain more capital by attracting new investors and revenue sources. The process of transforming an LLC into a corporation in California entails several simple administrative actions. First, LLC members or owners must vote to approve the conversion. This includes authorizing the terms of the business conversion, the content of the formation documents and the process of conversion of ownership rights. Then the LLC must file articles of incorporation with a statement of conversion that conforms to specific requirements under the California Corporations Code.  The articles must be filed with the Secretary of State. The business must also modify its classification with the IRS to ensure proper tax status.