When relocating to a new state, the question is often asked: What happens to my trust if I move? Do I need to have my trust redone if I relocate to another state?
A trust is a legal entity created primarily for establishing a distribution plan for one’s assets and to avoid probate. In many instances, the language within the trust will specify that the trust is governed by the laws of a particular state. At times the state where the trust was created differs from the state where the Trustor (the person creating the trust) last resides.
A trust is typically administered in the state where the Trustor last resides. Under the circumstances where someone has created a trust in one state and subsequently moved to another, the court will typically look to the laws of the former state with respect to the validity and interpretation of the trust document. However, depending on the language of the Trust, the laws of the second state (where the trust is being administered) may apply with respect to duties of trust administration. Accordingly, if trust administration issues arise, such as disputes over the duties of a Trustee or the rights of the beneficiaries, the court may consider the laws of the second state.
One of the goals of establishing a trust is to entirely remove court involvement from the distribution of one’s assets. However, there are times when court involvement becomes necessary, such as when the trust document or the actions of a Trustee are contested. In these situations, it would be unfortunate to deplete the assets of a trust in a legal battle over conflicting state laws. For this reason, it is often recommended that a Trustor amend and update their trust when moving to a new state.
If you have questions as to whether you should amend your estate planning documents, we invite you to contact the Law Office of Christine Padilla, a San Diego law office specializing in estate planning and probate. – Christine Padilla, Attorney & Owner