Several years ago my in-laws moved to Arizona.  My mother-in-law has some health issues and did not enjoy the winter weather.  She was out walking her dog one December day in Colorado and she slipped on the ice and broke her leg.  She did not enjoy the recovery process.

My father-in-law had a long driveway at their Colorado house, and he was not thrilled about the prospect of shoveling snow off the driveway all by himself each time it snowed.  When my wife and her four brothers were younger, he could send his boys out to shovel snow off the driveway, but now that his children were grown, he no longer had his group of sons to assist.  My mother-in-law felt better in the warmer weather and my father-in-law was in agreement that Arizona was a better place to be.  One of my brothers-in-law lived in Arizona, so they had been able to experience Arizona living and enjoyed it when they were there.

After they moved to Arizona, they learned that many of their neighbors were “snowbirds,” people who owned one property down in Arizona and another in Colorado or a different state.  The “snowbirds” would travel south to Arizona to live there during the winter months, and return to Colorado or their other home state during the summer months.  It does get extremely hot in Arizona during the summer, so I can see why people would want to leave and escape the heat!  My in-laws were not able to maintain a house in both Colorado and Arizona, so they ended up as full time residents of Arizona.  Snowbirds are part time residents of the state where they have a winter home.

Arizona is not the only snowbird destination state.  I know there are many people who have a Florida property for winter living.  Arizona just happens to be closer to Colorado.  I often talk to people who get very concerned about how they can set up an estate plan to cover properties in both states, since they are only part time residents of each state.  This is a fully valid concern, as laws can vary from state to state.  We also often end up discussing whether a trust or a will is the best idea for them as they travel from state to state.  For those people who are snowbirds and travel between states, setting up your estate plan to work in both states is important.

 

Estate Planning Laws Vary From State to State

Estate planning laws are not the same in every state.  If you are a snowbird, and you own property in multiple states, you will want to be aware of the laws for each state.  You don’t necessarily need to find an attorney who is licensed in both states where you own property, but some differences in laws can be important.  For instance, I have been told that Florida does not allow for irrevocable trusts to plan around Medicaid reimbursement and cost recovery rules under Florida law.  I am not exactly sure why, but I am told that is the state of the law in Florida.

Colorado does have provisions under Colorado law that allow for irrevocable trusts.  If you are looking to protect your assets from a nursing home and long term medical costs or from the government taking assets from your estate if you received government assistance while you were alive, then an irrevocable asset protection trust may be what you need.  Even if you travel between states, you can take advantage of Colorado’s laws to create an assets protection trust in Colorado, even if Florida would not allow you to do so under Florida law.  I believe Arizona does allow for irrevocable trusts.

Irrevocable trusts are not the only type of estate planning you can use, and irrevocable trusts do have their own drawbacks to consider, which I have discussed in other blog posts.  Not everyone wants, or needs, an irrevocable trust, but you should be aware of the need to plan for laws in both states where you live.

Owning Property in Multiple States Can Be a Key Consideration

For someone who owns property in multiple states, probate in each state will be required if you set up a will alone.  A will needs to go through probate to get property transferred from the deceased individual to the named beneficiaries or heirs.  If you own property in multiple states, then your beneficiaries or heirs will need to apply for probate in the state you were a resident when you pass away, and also in the state where you own other real estate.  Owning real estate is one of the main reasons probate needs to be done in a state, as owning real estate often triggers the requirement to file for probate in the state where the real estate property is located after someone passes away.  This second probate is called “ancillary probate” and might not be desirable for your beneficiaries or heirs, as it creates extra work, often in a state where the beneficiaries or heirs do not live.

If you were to create a trust, then you could set things up to avoid going through probate in any state.  A Colorado trust – whether revocable or irrevocable – can own property in a different state, like Arizona, or Florida.  The Colorado trust would then protect your beneficiaries or heirs from needing to go through probate in any state, and could save them time and money in administration time and costs.  Having property in multiple states is one of the key reasons people decide to create a trust.  A trust can own property in multiple states and pass that property on to your beneficiaries or heirs without needing to go through probate in multiple states or any state.  Such an arrangement often makes things easier on the beneficiaries or heirs after you have passed away, and that is often a desire of those who create an estate plan – making life easier for those who are left behind.

 

Picking the Right Estate Plan for Your Situation

Not everyone’s situation is the same.   You may want to use a trust to make things easier on your children, beneficiaries, or heirs, or you may want to just use a will.  If you just have a will, you might set up real estate in different states to transfer ownership of the property to your children by making them joint owners of the property or by using a beneficiary or transfer on death deed, which would also avoid probate.  There are positives and negatives to each approach.  To choose which options are the best for you, you should consult with an experienced estate planning attorney who can help you make an informed decision on what is best for you.  To schedule an appointment to set up a meeting with an attorney, click the link below.