If you are thinking of relocating to another state for tax purposes, you might want to get guidance from your wealth manager instead of the media. Although it might be tempting to read through all the many editorials that address this big decision, you should know that many of those articles use a one-size-fits-all hypothetical taxpayer scenario that probably doesn’t pertain to your unique financial situation. Still, if you are itching for a quick shot of advice, I suggest you read an article in CFA Magazine by Ed McCarthy called “The Domicile Decision”on page 34 of its eZine. McCarthy touches on several, broadly relevant issues:
- Income-, estate-, property-, and sales-tax rates vary significantly among the 50 U.S. states.
- Non-tax expenses, such as homeowner’s insurance, are often overlooked in the financial analysis of relocation.
- A complete review of potential savings for wealthy clients should include how their assets are titled and located.
- Recent studies have found that tax rates are not a significant motivation behind decisions to move.