NEW TO IDAHO? A DOCUMENT REVIEW IS IN ORDER
By: Sandra L. Clapp, Esq.
With the influx of new residents to Idaho, many arrive with estate planning documents that were established under the laws of another state. In addition, many individuals have the good fortune to have homes in multiple states or jurisdictions. As the state of residency changes or is extended to several states (or countries), it is important to make sure all legal documents are as effective as possible based upon those circumstances. For estate planning documents to accomplish their purpose intended, the documents need to be current and valid.
A mere move to Idaho (or any state) will not automatically revoke or terminate estate planning documents. Under the “full faith and credit” clause found in Article IV, Section 1 of the United States Constitution, each state is required to respect the “public acts, records, and judicial proceedings” of other states. Thus, if the documents were valid under the laws of the state where executed the Idaho courts should accept the validity of these documents as well. However, this continued legal existence does not mean the documents will be interpreted consistently by a health care provider or that the documents will be readily accepted as valid without court intervention. For this reason, it is important to consult with an attorney in the state (or states) where you reside or spend significant time to make sure all legal documents will efficiently carry out your intent and are coordinated between the various jurisdictions.
It is particularly important to review estate planning documents that were signed outside of Idaho if you are married. Idaho utilizes the laws of community property and separate property to characterize assets of a married couple. States with the community property system of asset character is the minority. Thus, documents that were established in a state that does not recognize community property may not be appropriately worded to take into effect the impact of the move to Idaho on marital or separate property. The assets owned by a married individual are all of his or her separate property plus one-half (1/2) of the community property. These are the assets that can be distributed pursuant to a will or managed under a power of attorney. Community property is generally presumed to be all assets acquired during marriage unless one can prove the asset is separate property. Separate property is generally defined as all assets owned prior to marriage and any asset obtained during marriage through gift, devise, inheritance or bequest.
In addition to potential interpretation issues in the document, not all community property states treat separate and community property the same. In Idaho, income accruing on separate property is deemed to be community property. In other community property states such as California, income accruing on separate property may remain separate property of the owner. A move to Idaho may have an unintended impact on separate property if not carefully structured and managed. A simple investment account that one spouse considers separate property may have unwittingly developed a community property character or component merely by moving to Idaho. That community property interest may then form an asset of the spouse whose name is not on the separate account.
Health care directives (such as a living will) are also state specific and should be updated utilizing the statutory form of the state of residency. If significant time is spent in multiple states or jurisdictions, it may be appropriate, in consultation with legal counsel, to sign the statutory form of health care directive utilized by both states. General powers of attorney over property and business affairs may also need to comply with strict statutory requirements to be recognized as valid. Even if these documents are technically valid under the laws of the state where adopted, if the documents are not similar to those utilized in the state of residency the institution receiving the power of attorney may refuse to accept the power of attorney. Finally, any powers of attorney that are over three (3) years old should be reviewed by an attorney and updated if possible as financial institutions may have adopted an internal procedure that will not allow the institution to accept a power of attorney they deem outdated even though not based upon any provision of law.
If you are new to Idaho, have your documents and assets reviewed by an Idaho attorney to insure the documents are appropriately structured and carry out your intent.
This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. Because of the complexity of the estate tax laws, please consult with your attorney for proper guidance.