Did you recently retire or move to Arkansas from another state? If so, you might want to read this article. The legal complications of moving from state to state are not as complicated as they were in past years. But you still want to be "street smart" about the tax and legal issues that can differ from one state to another.
For example, if you sold your home in another state recently, you probably do not owe any capital gains tax on the sale, but you usually do need to file a final state income tax return for that state. The good news is that you will probably not owe any tax on the sale if your profit was less than $500,000 (this exemption may vary from state to state, but the federal exemption for a married couple is $500,000 in profit on sale of the principal residence)
What about your will, trust and power of attorney? Are these documents legal in Arkansas? As a general rule, the answer is yes. A legal document properly executed in another state is legal in Arkansas.
But then the legal system always has exceptions to consider. Do you have children that you are not naming your will? Arkansas has a law, known as the "pretermitted heir law" that requires your will to at least mention the child, even if you do not wish to give that child anything under your will. Likewise, if you have a deceased child leaving children, you need to mention those grandchildren's names in your will. Failure to mention the child or grandchild can result in that person you wished to disinherit instead of receiving a large portion of your estate despite the terms of your will to the contrary.
What about Arkansas estate tax? Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem. The federal estate tax still applies to estates in excess of $13.61 million and there are even larger estate tax exemptions for married couples.
Do you still own real estate in another state? For example, many families own vacation condominiums in Florida or Colorado. If so, you will want to plan for that to avoid "ancillary probate," which is a probate court proceeding in another state. This can be an expensive and time-consuming legal problem for your surviving spouse or children.
In summary, if you have moved to Arkansas from another state, the laws are usually not significantly different from state to state. But you still may want to double-check your will or trust to avoid any legal problems that may be unique to your family situation.
Wesley W. Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be contacted at 501-525-4401 or by email at [email protected]. The firm's website is farrarwilliams.com.