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.  

Shareholder

Rights

When you become a shareholder in a corporation, what rights do you have as a partial owner of the business? Shareholders are entitled to share in the company’s profitability, but they also retain other rights related to the operation of the business. Understanding the nature of your rights as a shareholder is important in maximizing your investment potential and minimizing your risks.

Economic rights.  Shareholders own a portion of the assets of the corporation.  Allocation of profits depends on the number of shares owned by the shareholder. One of the rights of ownership entails the ability to easily transfer or sell these rights to another individual at your discretion. Certain corporations issue different classes of shares known as common and preferred. Common shareholders and preferred shareholders own different stakes in the company.  

Voting rights. Voting rights are one of the primary means for shareholders to exert control in corporate affairs. Shareholders are permitted to vote on certain corporate matters, including electing the board of directors and structural or strategic decisions to be made by the corporation. Shareholders are also entitled to vote when the value of their ownership interest is at issue, such as whether the company should approve a merger or acquisition. Shareholders typically vote on such matters at annual stockholders’ meetings or other special meetings that are called to address extraordinary issues.    

Rights to Dividends.   In certain circumstances, shareholders may be entitled to receive a share of the corporation’s profits in the form of dividends. The Board has discretion to decide what percentage of profits will be distributed to shareholders as dividends. The Board may choose to reinvest the corporation’s profits in lieu of distributing them to shareholders. Shareholders only have the right to claim the dividend once it is declared by the Board.

Inspection Rights. While the financials of public corporations are open to public inspection, the financial information of private corporations is not readily accessible. Shareholders have the right to inspect the books and records of the corporation, which can be especially important if a shareholder suspects mismanagement or improper conduct.

Litigation rights. Shareholders have the right to redress misconduct by the Board for a breach of its duties through derivative litigation. When management does not take appropriate legal action, a shareholder can do so on behalf of the corporation after first requesting management take action.