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Snowbirds Should Determine Where to Nest for Estate Planning Purposes

Being a snowbird, living six months in Michigan or Nebraska and six months in Florida or Arizona, can be a great life style in retirement. However, one place needs to be your legal residence. Ask yourself where are you from, or where do you vote?

CBS Boston’s recent article, “Snow Birds: Protecting Your Estate While Living in Two States,” explains that it’s the laws of the state where you are legally a resident, which will determine your estate planning.

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.

Easter-eggs-2145667_640Ask 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 determines 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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Jeffrey Bellomo, Esq.

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