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For Snowbirds: Estate Planning and Other Considerations

If you have lived with New England winters your entire life, and if you are lucky enough to have the financial freedom to consider becoming a ‘snowbird’, relocating to a warmer clime may seem like a no-brainer. In fact, as many as one-third of soon-to-be retired folks indicate that they consider doing exactly that.  But before you make the decision to permanently relocate, or to split your time between Massachusetts and a tropical paradise, you owe it to yourself to do your due diligence.

Which State Should Be Your Permanent Residence?

Consider: Tax Advantages

Relocating to certain states, such as Florida, can save you real money on income tax (Florida has none).  But that is not the end of the inquiry, particularly since many retirees will see only a small tax bill even if they remained residents of Massachusetts.  Give some thought also to the amount of sales tax you will be paying, and the real estate tax rate for the property you are considering.

If you decide that your domicile will be out of state, but that you will be splitting time and staying in Massachusetts part of the year, you need to document that you really do live in the state that you have selected, and that means you must be prepared to show proof - driver’s licenses, car registrations, voter registration, utility bills, church memberships, phone records, mail change of address orders, receipts, etc. - to prove your permanent intention to change your domicile.  Be aware also that even if you dot all those ‘i’s, you still must be able to prove that you spent fewer than 182 days in Massachusetts, and not 184!  Also, know that Massachusetts Department of Revenue may pay attention to how you hold your homes and the size of your homes: if you only rent your out-of-state home, or if your new home is smaller than your Massachusetts home, this could raise suspicions about your true permanent residence.  Likewise, if you continue to have business contacts in Masaschusetts, or keep your accounts in the state, your situation may be looked at closely.

            Consider: Medical Care

            As we age, access to quality medical care becomes even more important.  Massachusetts is known for the quality of its medical services, and changing your residence can have profound impacts on your ability to access this care.  Give some thought to where you want to be should a severe medical need arise.  Does your new residence afford you access to quality medical care?  How much more is it to obtain coverage in your new permanent residence (in Florida, the cost may be quite a bit higher)?  Is it important for you have access to family who can be with you and support you in your new residence?  Consider that if you require nursing home care in the future, your change of domicile means you may not be able to qualify for coverage of nursing home care in Massachusetts. 

            Consider: Homeowners Insurance

            If you maintain a home in Massachusetts, but split your time with another state, do not overlook your homeowner’s coverage.  Take the time to read and understand your homeowner’s insurance policy, particularly the exclusions.  Often, you may find that your policy will not cover the home if it is ‘vacant’ or ‘unoccupied’.  This means that the insurance company will deny a claim for damage if, for instance, the home is empty in the wintertime and is damaged by ice dams (think Winter 2015), burst pipes, etc.  Your insurer will most likely be able to sell you a “vacancy endorsement,” but be prepared to pay…

            Consider: Your Current Estate Plan

            Relocating out of Massachusetts can have a substantial impact on the effectiveness of your Estate Planning.  While it will be important to meet with a qualified attorney in your new state of domicile, you should also check in with your Massachusetts attorney to see if there are any actions you should take to protect yourself.

            Before you make the decision to retire out of state, whether splitting your time with Massachusetts or leaving with no intention of returning, you should take the time to speak with your financial planner and also an experienced estate planning attorney who can help you to navigate these issues and others.

Martin Winstead