Snowbirds: Do You Know the Best Place to Nest?

SnowbirdsIt’s the laws of the state where you are legally a resident, which will determine your estate planning.

Being a snowbird, that is, living six months in Michigan or Nebraska in the summer and six months in Florida or Arizona in the winter can be a great lifestyle in retirement. However, one place needs to be your legal residence. If you have lots of money, you need to know which of the two states you live in offers the most advantageous tax laws and then make it your legal residence.

The federal exemption, the amount you can give away without incurring federal estate taxes, is $5,490,000. That can be a pretty high mark, so most individuals dying between now and December only have to worry about state estate taxes.

Ask an estate planning attorney about the estate tax laws of the state where you’re considering moving. There are 15 states that currently have an estate tax upon death, and six states that have an inheritance tax.

For example, Massachusetts is one of the 15. Its state exemption is now $1 million. That means if your estate is larger than $1 million, you could owe Massachusetts estate taxes. On the other hand, Florida, which is always seeking to attract more residents from the north, doesn’t have either an estate tax or an inheritance tax.

New Hampshire is the only state in New England without an estate tax.

It’s not uncommon for a person to own property and pay real estate taxes in both states, to have a bank account in both states and to purchase insurance in both states. Nevertheless, you can only live in one state. You’re just visiting the other state. Six months and one day determine where you live and where you vote.

If you own property in different states, it may mean that your heirs will need to go through the probate process upon your death in more than one state. Consider creating a trust and having the trust own the real estate to make the transfer of property less troublesome at your death.

Snowbirds should also look into executing a Durable Power of Attorney for each state. In that way, if they do need legal or financial decisions made by another person, they will have the documents available to help them. This is an absolute necessity if you have property or bank accounts in both states.

Reference: CBS Boston (October 13, 2017) “Snow Birds: Protecting Your Estate While Living in Two States”


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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.