A Financial Flight Plan For Snowbirds

If you are a would-be snowbird, it pays to do some financial planning before you take flight.

According to a study by Merrill Lynch, by age 61, many people say they are free to chose where they most want to live. More than a third of the retirees surveyed said that they have already moved and 27 percent anticipate doing so.

Before you start splitting time between two or more states, you have to consider which one you want to be your primary place of residence – also known as a domicile, says John J. Scroggin, an accredited estate planner and partner with Roswell, Georgia-based law firm Scroggin&Co.

He also says that there can be many advantages to picking one place over another as several states have no income tax and 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 as well.

Remember that each state has its own requirements to prove residency, so check for the details. You should start with making sure to change your driver’s license, mailing address, and tax return address.

Scroggin says that one common mistake people make is having their income tax return go to the wrong state. The federal government and states share that data.

Also, don’t forget to check that all your estate planning documents – such as power of attorney, wills, and medical directives – are still valid under your new state laws. You may have to also amend auto insurance policies to make sure that you are adequately covered in both areas.

Finally, Scroggin says that many of his clients end up finding that they miss friends and families too much to want to spend the majority of their time in their once-dream location. He recommends trying out the snowbird lifestyle first by renting a place for a few months and seeing how you adjust instead of buying one right away.