Earlier in life, family and work dictate where most of us live. But by age 61, most people start thinking about where they want to live.
CNBC’s recent article, “A financial flight plan for snowbirds,” says that it's not surprising to see retirees move, at least part time, to their dream destination. More than a third of retirees surveyed reported that that they’d already moved, and another 27% anticipated moving soon. But before you begin splitting time between two or more states, think about which state you want to be your primary place of residence, or domicile because you can have multiple residences—but only one domicile.
Consider the advantages of choosing one state instead of another, like the fact that there are several warm weather states that don’t have a state income tax. Others have tax breaks on retirement income and on real estate taxes for older residents. Estate taxes can also be more favorable in some states than in others.
Once you’ve decided, be prepared to show the government that the state you picked is truly your domicile state. Some states have investigated people who say they’re now residents in other states and who say they don’t owe any taxes.
Each state has its own requirements to prove residency. For example, make sure to get to the local DMV and change your driver's license, change your mailing address and tax return address. Don't forget to change your auto insurance policies to be adequately covered in both states.
A big mistake people make is having their income tax return sent to the wrong state. That can be a bad move, since the federal government and state governments share this type of data.
Our office represents clients in New York and Florida, so we can help you be sure that all your financial and estate-planning documents, like your will, powers of attorney, and healthcare or medical directives, still are legal under the laws of your new state.
Making the move and becoming a snowbird can be a big change. Experts suggest you give it a test run first. Some folks find that they miss their families and friends too much to spend the majority of their time in that once-dream locale. Don't buy a new home in a different state right away. Try renting for a few months to see how you really adjust.