Multi-Jurisdictional Estate Planning for Clients with Family and Assets in Multiple Jurisdictions

Host: Let’s go ahead and jump right into it. Multi-jurisdictional estate planning—what is that? Can you define it for us?

Attorney: Yeah, so I don’t know if there’s a pure definition. I was actually having a conversation with someone recently, explaining what we do in our practice, and they said, “Oh, so you do multi-jurisdictional estate planning.” I thought, yeah, I guess that’s right. I hadn’t thought about it in those specific terms, but the best way to describe it is to give you an example.

We’re located in Houston, Texas, and we also have an office in Louisville, Kentucky. Let’s say mom and dad are located in Texas. They have a child in California, another in New York, and another in Florida. They might have business interests throughout the country and real estate in different states. So, there are different jurisdictions coming into play here. You could technically do all the planning where mom and dad are located, but that may not be the most advantageous approach.

We focus on asset protection and tax planning. We look at the laws in these other states to figure out what’s most beneficial for the family, the beneficiaries, and the heirs from a tax and asset protection perspective, and even from an administrative perspective—like what happens when someone passes away, and how do the laws in these different states affect the passing of assets from one generation to the next. This is something you have to consider to put together a comprehensive plan that takes care of the family.

We don’t practice law in all these states ourselves—no attorney is going to be licensed in every state. But we step in, come up with the comprehensive plan, and then work with attorneys in those local jurisdictions as co-counsel to ensure that we’re doing all the planning according to the various jurisdictions involved.

We also practice law in South Dakota, which is recognized as the premier trust jurisdiction in the U.S. because of its asset protection laws, tax laws, privacy laws, and the ability to create Dynasty Trusts. There’s a lot of flexibility in South Dakota that clients in other states might want to take advantage of. Either way, we’re putting together a plan that makes the most sense given all these different factors.

Host: Yeah, that makes a lot of sense, especially with modern families where everyone is spread out. So, are all attorneys doing multi-jurisdictional estate planning?

Attorney: No, they’re not. To your point, it’s just a modern approach to a client’s needs. Historically, most attorneys have focused on the jurisdiction where they’re located, and that’s typically where the client is located as well. Because of this, I’d say it’s an antiquated way of practicing law. Not all attorneys are doing this, and it’s certainly not something you learn in law school. It’s something you get exposed to through experience.

If you focus on just one jurisdiction, you’re putting together a legally valid plan, but it may not be the most advantageous plan for modern families and circumstances.

Host: Right, absolutely. So, for everyone who owns assets in a couple or a few different jurisdictions, do they need multi-jurisdictional estate planning? Is this for everyone in that situation?

Attorney: Great question. The short answer is yes. Now, what that plan ends up looking like could differ from situation to situation. At the very least, you need to be looking at the laws of those various jurisdictions where mom and dad have assets—maybe they have real estate or rental properties in one state or a vacation home in another. You need to figure out how those jurisdictions handle the transfer of assets. Do you need to go through an estate administration process? Do you need a revocable living trust to avoid probate?

That’s the simplest level, but we try to step it up even more and look at tax issues, asset protection issues, and more. But at the most basic level, yes, you have to at least consider the laws in those other jurisdictions.

Host: That makes a ton of sense. So, how did you get into this area of practice?

Attorney: I wish I could tell you it was a linear path, but it wasn’t. In addition to working for boutique estate planning law firms, my background includes working in public accounting. I was in public accounting for six years, working for Ernst & Young. I was in two specialty groups there.

The first one focused on international tax planning. All of our clients were businesses, mostly Fortune 100 companies, with employees traveling around the world for international assignments or executives traveling globally. In that situation, you end up with U.S. tax reporting and compliance issues, as well as tax issues in all the other countries you’re touching down in, spending time in, working in, or living in. We did all the planning domestically and internationally, working with our colleagues in other countries and coordinating all of this planning to make sure the client was served properly.

The other aspect of what I did was more focused on corporate taxation issues at the state and local level, which is also multi-jurisdictional. Most people don’t realize this, but for a business operating in more than one state, their largest tax liability usually isn’t federal income tax; it’s property tax, sales and use tax, employment tax, and other state and local tax issues. I’ve read different figures, but there are around 8,000 to 10,000 tax jurisdictions within the U.S. So, I got exposed to this world of working across multiple jurisdictions.

When I left public accounting and returned to the practice of law, I worked for a firm that had clients throughout the country for a variety of reasons. We were always doing some type of multi-jurisdictional planning because our clients were everywhere, and we were working with local counsel in these jurisdictions. Public accounting gave me that background and this philosophy of always asking, “What is the most advantageous jurisdiction for a client?”

Host: That’s fantastic. A lot of great information. Thank you so much. If you like this content, please like and subscribe. In the meantime, check us out at StewartGreenLaw.com.