Leaving the winter chill behind may offer more than warmer weather. Whether you are relocating full-time or splitting your time between Illinois and a warmer destination, moving across state lines can create important legal, tax and financial considerations.
Arizona, Florida, North Carolina, Tennessee and Texas continue to attract individuals, families, retirees and business owners looking for a different lifestyle (and often lower taxes). However, establishing a home in another state involves more than purchasing property or changing your mailing address.
With offices in Chicagoland and Florida, an attorney based in Texas and attorneys licensed across 20 jurisdictions, our team at Kelleher + Holland helps clients manage legal needs that extend beyond one state. We serve as a legal bridge from where you are now to wherever your future takes you.
Your Move May Create New Planning Opportunities
Your estate plan, tax position, property ownership, asset-protection strategy and business interests may all be affected by a change in residence. Reviewing these matters together can help you understand what needs attention and where new planning opportunities may exist.
These pieces all work together, and so do we.
Residency and Domicile Are Not Always the Same
One of the first issues to understand is the difference between residency and domicile.
A person may have residences in more than one state, but domicile generally refers to the state considered their permanent legal home. Your domicile can affect state income taxes, estate and inheritance taxes, property-tax benefits and other legal matters.
Simply spending part of the year in another state may not be enough to establish a new domicile. States may consider several factors aside from the number of days spent in each state, including:
- Where you spend your time
- Where you own or lease a home
- Your driver’s license and vehicle registration
- Your voter registration
- The address used for tax returns and financial accounts
- Where your important personal property is located
- Your professional and community relationships
- The location identified in your estate-planning documents
Because these factors can vary depending on the states involved and your circumstances, relocation planning should be coordinated carefully.
Review Your Estate Plan After a Move
Estate-planning documents are generally created under the laws of a particular state. A move does not necessarily invalidate an existing plan, but it provides an important reason to review it.
Your estate-plan review may include:
- Revocable living trusts
- Wills
- Financial powers of attorney
- Health care powers of attorney
- Living wills and health care directives
- Beneficiary designations
- Trustee, executor and agent appointments
- Ownership and titling of real estate
- Provisions affected by state-specific law
A review can help determine whether your existing documents continue to reflect your wishes and operate effectively in your new state.
It is also important to consider whether the individuals named to serve as trustees, executors or agents are still the appropriate choices after your move. Distance, family changes and practical availability may affect their ability to serve.
Consider How Your Property Is Owned
Purchasing a primary residence, vacation property or second home in another state can affect your broader estate plan.
The way property is titled may influence what happens to it after death, whether probate may be required and how the property fits within an existing trust. If you already have a revocable living trust, purchasing property does not automatically mean the new property will become part of that trust.
Before or after acquiring property in another state, consider reviewing:
- The names listed on the deed
- Whether the property should be held in a trust
- How the property coordinates with your will
- State-specific homestead considerations
- Liability and asset-protection concerns and insurance coverage
- The potential for probate proceedings in more than one state
Coordinating your real estate and estate planning can help ensure the property supports your overall objectives.
Evaluate the Tax Considerations
Relocating may change your state income-tax obligations and expose you to different estate, inheritance, property or business-tax rules.
Some states do not impose an individual state income tax, while others may offer different treatment of retirement income, investments or business earnings. However, a move does not automatically eliminate tax obligations in the state you are leaving.
Your former state may examine whether you genuinely changed your domicile, particularly if you continue to own property, operate a business or spend substantial time there.
Your tax professionals and legal counsel should work together to evaluate:
- Your continuing connections to your former state
- Income earned from property or businesses located in another state
- State estate or inheritance-tax exposure
- The tax treatment of trusts
- Property-tax and homestead requirements
- Recordkeeping that supports your residency position
The goal is to understand the rules that may apply before a residency question or tax issue arises.
Do Not Overlook Asset Protection
Asset-protection laws vary from state to state. A relocation may affect protections involving a primary residence, retirement accounts, insurance, trusts and business entities.
This does not mean every move requires a new legal structure. It does mean that existing strategies should be reviewed under the laws of the states connected to your life and assets.
A coordinated review can help identify whether changes are necessary and whether those changes support your estate planning, tax and financial goals.
Address Business Interests That Cross State Lines
Business owners may have additional responsibilities when relocating or expanding into another state.
Depending on the business and its activities, questions may arise concerning:
- Whether the company must register with the Secretary of State in another state
- State and local tax obligations
- Employment-law requirements
- Business licenses and permits
- Contracts and governing-law provisions
- Ownership and succession planning
- The relationship between business interests and the owner’s estate plan
Personal relocation and business planning should not be treated as completely separate issues. A change in the owner’s residence may affect the company, and changes to the company may affect the owner’s estate and tax planning.
One Firm for Every Matter, Wherever Life Takes You
Moving across state lines often touches more than one area of the law. Reviewing these matters together can help you identify gaps, avoid conflicting strategies and create a plan that reflects where you live now and where you may be headed next.
Kelleher + Holland, LLC brings every practice area under one roof. Our attorneys collaborate across those areas so you have one team to turn to as your personal, family and business needs evolve.
360° Legal Solutions for Your Personal + Business Needs
From wills and trusts to business law, real estate, litigation and more, we provide a full circle of legal services for individuals, families and businesses. We call this 360° Legal Solutions: attorneys across practice areas working together to address your immediate needs while considering your broader goals.
Ready to make the most of your next chapter? Contact our team to discuss your move and how we can help coordinate the legal pieces of your transition.