For Former California Residents (Why You Should Update Your California Estate Plan)

People are moving to Nevada from California, trading crowded highways, the high cost of real estate, and expensive taxes for the serenity of Nevada’s wide-open spaces and desert climate. If you recently relocated to Nevada from California, it is important that you update your estate plan to take full advantage of the financial benefits of your new residence, and to ensure that your estate plan functions as intended.

California has become increasingly aggressive in assessing taxes against people who live in Nevada but have a temporary residence in California. If you are moving to Nevada from California, protect yourself and your family by having an experienced probate and estate planning attorney review your Will, Trust, and other estate planning documents to ensure that they comply with and are governed by Nevada law.

Having an attorney review your estate plan will give you peace of mind, avoid unnecessary taxes, and ensure a smooth estate administration.

An Attorney Can Help Minimize California Tax Liability

California has some of the highest taxes in the country. In addition, California has disallowed many federal tax deductions and does not have reciprocal agreements that allow non-residents to work in California while only paying income tax in their home state. Finally, the California Franchise Tax Board takes an aggressive stance to define someone as a California resident and subject to California taxes. As a result, many people who have moved to Nevada from California still find themselves subject to California tax laws.

California law generally recognizes five different ways a person can be classified as a California resident:

  • Physical presence - the number of days you spent in California versus another state, where you receive bills and personal communications, where you leave from and return to after a vacation, and whether you own a second home in California.
  • Family presence - where your spouse resides, and where your children were born, live, attend school, raise their families, and receive medical and dental care.
  • Property presence - Location and size of owned or rented real estate, including whether the home is claimed for homestead and tax exemptions, the location of vacation homes, bank accounts, and safe deposit boxes.
  • Professional presence - Where a taxpayer is employed, conducts business activities, serves as a director, officer, or manager of a business, holds professional licenses or memberships, and receives professional services.
  • Legal presence - Where legal documents and tax returns are prepared and given legal effect, and where a taxpayer is registered to vote, has a driver’s license and automobile insurance, and is involved with and makes donations to social, civic, or religious organizations.

To prevent having your Nevada assets subjected to California taxes, you should update your estate planning documents and consider replacing California trustees, attorneys-in-fact, executors, and other fiduciaries with people who live in states other than California.

Ensure Your Estate Plan Is Governed by Nevada Law

Generally, each state recognizes wills and trusts that were executed in another state. However, many trusts contain references to specific state statutes that require a Nevada court to apply the law of the state where the trust was executed. This can create complications because a Nevada court is not likely to be familiar with the laws of the other state.

To avoid complicating your estate administration, have an attorney review your estate planning documents and amend them as necessary to ensure they are governed by and comply with Nevada state laws.

In addition, a Property Power of Attorney, Healthcare Power of Attorney, Living Will, and other Advance Directives are often subject to local statutes. These documents may need to be revised or re-drafted by a Nevada attorney to ensure they function as intended, and to make sure a Nevada financial institution or medical provider understands the document and gives it its full effect.

Finally, while beneficiary designations on an insurance policy, bank account, retirement plan, or other account should be valid wherever you live, it is wise to have these documents reviewed by a lawyer after any significant life change, like moving across state lines. Having an attorney review these documents ensures that these designations are still current and minimizes the likelihood that you will be considered a California resident after you move to Nevada.

The Vander Laan Law Firm: Peace of Mind Through Proper Estate Planning

If you and your family have recently moved to Nevada from California, you should have your estate plan reviewed by a qualified and experienced estate planning and probate attorney.

From her offices in Minden and Carson City, Nevada, attorney Natalia Vander Laan offers probate and estate planning services to people throughout the Carson Valley.

Learn more about Natalia Vander Laan and what sets the Vander Laan Law Firm apart from other attorneys in the Carson Valley, then contact the Vander Laan Law Firm today to schedule a confidential consultation to review and update your estate plan.

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