Retiring or Relocating to Another State? Phoenix, Mesa, Arizona, Jacksonville, Naples, Fort Meyers…Oh wait! don’t forget about Austin, Texas!

Snowbirds Retiring Down South

A younger version of me never thought the older version would consider a second home and purchasing one away from my home state of Minnesota. Fast forward a few years and my perspective has changed! I’ll be honest, cold tundra weather and high taxes in Minnesota could easily validate my decision alone, but dig a little deeper and there’s a host of reasons why my clients and I need to prepare where we want to live, not only short term but long term. Making this decision early on is a key component in making your retirement meaningful.

Give credit where credit is due. Thanks to Minnesota’s Governor Mark Dayton, higher income earners have to pay even more.

Single income filers with a taxable income over $155,650 and married joint filers with incomes over $207,540 are subject to a new 9.85% state income tax rate for 2016.

A $1.8 million lifetime gift threshold, anything over that is subject to an estate tax from 10% to 16% for 2017.

Plus the State of Minnesota is looking back three years for gifts made after June 30th 2013 and gifts within three years of your death are to be added back into your estate so they can tax you just a little more.

So let’s proudly accept the snowbird status and jump on the next flight to sunny Naples, Florida together (I’ll carry your bags) and for good measure we’ll check out Phoenix, Arizona for a suitable comparison…right?

Well, almost. Snowbird status now comes with a host of rules to help ensure they are compliant if they want to minimize their financial exposure.

Here’s a simplified list of items below. Also included is a downloadable Minnesota’s Residency Revenue Fact Sheet (PDF).

  • Where do you obtain your services from banking, Investment Advisor, CPA, etc.?
  • Where do you attend Church?
  • Where do you kids attend school?
  • Where do own property?
  • Where do you bank?
  • Where do you have your mail sent?
  • Where does your business reside?

Snowbird Requirements

There are over 26 requirements you’re asked to comply with to be recognized as a resident in another state. Your team of advisors consisting of your Financial Advisor, CPA and Attorney should be consulted to help guide you through the process of changing your residence when you are ready to make this change. Many factors will go into your decision. It’s not always about income, lower state taxes, and estate or gift taxes, but rather focus on the criteria specifically pertinent to your situation. Be informed and make your retirement meaningful!

I’m ready! What’s the next step?

St. Croix Advisors, LLC is a Registered Investment Advisory firm located in Woodbury, MN.Disclaimer