Retired and Thinking of Relocating?

June 1, 2010 | Subscribe to our RSS Feed

When a person retires, he or she may decide to move to another state for a variety of reasons, such as living in a warmer climate, being closer to children or other relatives, avoiding state income tax, or health reasons.

If the retiree’s move is permanent, it is important that legal domicile be established in the new state. (The exact definition of domicile varies from state to state. In general, domicile is the individual’s true, fixed, and permanent home and the place to which the individual intends to return, even while residing elsewhere. A person may have more than one residence, but can have only one domicile.)

If domicile is not established, the retiree may be subject to income tax as a resident of both the old and new states. Furthermore, if the retiree dies without establishing domicile, both the old and the new states may claim jurisdiction over the retiree’s estate. However, since each state has its own rules relating to residence and domicile, both states may try to impose their income taxes on the retiree even if he has established domicile in the new state, but has not relinquished domicile in the previous state to its satisfaction.

The more time that elapses after the move and the more steps the retiree takes to establish domicile in the new state, the more difficult it will be for the old state to assert that the retiree resides or has domicile there.

The following list includes some steps that tend to establish domicile in a new state:

• Register to vote in the new location.
• File a change of address form with the post office at the old location and change the address on documents, such as tax returns, wills, contracts, insurance policies, passports, and living trust agreements.
• Obtain a driver’s license and register automobiles in the new location.
• Open and use bank accounts in the new location.
• Move items from safe-deposit boxes in the old location to the new location.
• Purchase or lease a residence in the new state. Sell residence in the old state.
• If an income tax return is required, file a resident return in the new state and a nonresident return (or no return, if appropriate) in the old state.
• File for property tax relief under a homestead exemption (if any) in the new state. (The homestead exemption will be discussed later.)
• Move all items that make a house a home such as mementos, heirlooms, sentimental items, trophies, collections, furniture, etc. to the new state.

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

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