Snowbird Estate Planning for a Changing Environment

If you move with the seasons, your retirement and estate planning needs special attention — now more than ever. This article provides some considerations for snowbirds in changing times.

Snowbirds Within the United States

Living in two states during the year? Federal taxes stay the same. Retirement income gets taxed in the state of your primary residence (“domicile”). This is where the taxpayer spends the majority of days in a tax year. Normally, this is also the state where the taxpayer votes, and is licensed to drive.

Only a handful of states don’t impose income tax. Florida, a key snowbird state, happens to be one of them. Getting Medicaid coverage for nursing home services is easier in Florida, so some retirees decide to make that their primary residence and legal domicile. If they are on Medicaid, these retirees should be sure to submit a new application for Medicaid in Florida.

Here are some points on managing the deed and title when selling your home in retirement.

Special Concerns for Florida Snowbirds

A deed holder who has made a permanent home in Florida qualifies for a homestead tax exemption of up to $50,000. The exemption has more provisions for seniors aged 65+, disabled vets, and more. Be ready to show proof that you occupied the property on Jan. 1st of the applicable tax year.

Designating a home as a homestead also offers some protection from companies a deed holder owes money to (“creditors”). Some businesses can be stopped from trying to foreclose on their liens.  

Normally, a homeowner can place the deed in the name of a revocable living trust and still claim the homestead exemption.

Here are some considerations when you’re thinking of deeding your home into a living trust.

International Snowbirds

Most of our international snowbirds fly down from Canada. The National Association of REALTORS® points to Florida, Arizona, and Hawaii as these faithful snowbirds’ top picks for second homes. South Florida’s housing market has long depended on that annual migration ritual of older adults from Canada. But now, migration is dropping off.

Real estate agents say they are seeing more Canadians looking to offload vacation homes in Florida, Arizona, California and elsewhere. They list multiple reasons. For many international snowbirds, the derogatory rhetoric coming from U.S. leadership is the last straw on the camel’s back. Sunbelt states were already dealing with climate risks along with skyrocketing insurance bills.

Canadians looking at the U.S. market should stay alert for federal visa law changes. The Trump administration is now requiring anyone aged 14 and up, who plans to stay in the United States more than 30 days, to register and be fingerprinted. This applies to Canadian passport holders. Prior to this, Canadians could stay for up to six months with no visa or special paperwork necessary.

Will or Trust? Ask the Experts

Revocable trusts can make sense for people with out-of-state property. One trust directs decision-making on homes in multiple states. This streamlines administration after a deed holder passes.  

If you are thinking of feathering nests in more than one state, consult a tax specialist or your financial adviser for guidance. And have your will or trust reviewed by a lawyer in the state where you plan to spend your winters. Your legal expert might recommend creating multiple, state-specific wills, powers of attorney, and medical directives.

Deeds.com cannot give legal or financial advice. To find estate planning experts in states beyond your domicile, check in with the National Elder Law Foundation and the National Academy of Elder Law Attorneys.