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By the Tax Services Department

You’ve finally made the decision to become one of “those people.”  describe the imageYou know, the person who, as was drawing closer to retirement (and coincidently, during one of the never-ending sub-zero days of winter), decided that living somewhere south of the Mason-Dixon line  just made sense. You meticulously planned to move south to retire. But, before you settle back in the lounge chair twirling the paper umbrella as it shades your Pina Colada, you may want to ensure you have all of your assets in order.

 Over the past few years, the new Federal gift and estate tax laws have been widely publicized and discussed between tax professionals and their clients.  The idea of discussing a state estate tax usually comes up, if at all, at the end of the conversation and is quickly disregarded.  State estate taxes, though taxed at a much lower rate than the Federal rate of 40%, usually have a much lower gross estate threshold when it comes to who has to file.  The Federal exemption, for example is $5,430,000 for 2015 while a state like New Jersey taxes residents who pass away with a gross estate of only $675,000.  It is important to note that Ohio no longer has an estate tax.

What many do not realize is that just because you move to Florida from New York for example, even though Florida doesn’t have income or estate taxes, you may not be off the hook for estate taxes. 

Nineteen states plus the District of Columbia impose either an estate or inheritance tax (or both).  How could a Florida resident be taxed in New York?  States with estate or inheritance tax will impose taxes on non-residents with real estate or tangible property in the non-resident state.  For example, a couple retires and decides to sell their New York home and move to Florida.  As they find themselves coming back to New York often to visit family and friends, they decide to purchase a small condo in New York.  Even though for income tax purposes there is no income tax requirement for New York, when the last of the married couple passes, New York would impose a non-resident estate tax based on the value of their New York assets.

In addition, some states like Connecticut require a completed Federal estate tax return, Form 706, be attached to the state estate tax return.  This is overly burdensome as a decedent would only typically be required to file a Form 706 of their worldwide assets are in excess of $5,430,000.  Connecticut requires a state estate tax return when gross assets are in excess of $2,000,000. 

So, what can you do when you retire to Florida but have real estate or tangible assets in one of the 19 states?

  • Sell your assets
  • Gift your assets away
  • Transfer your assets into an irrevocable trust

But the above options do not always come with great consequences, especially when it comes to income and gift taxes.  Understanding the potential tax impact of your move to the sunshine state is best understood now and planned for accordingly.  The nuances surrounding estate, gift and trust rules can be confusing.  I, along with our estate, gift and trust department staff, am well-versed and ready to help. If you would like to discuss your options, contact me at 216-831-0733 or

About the Tax Department

Led by partner Howard Kass, CPA, CGMA, AEP, the taxation department team works with individuals and businesses to ensure compliance, planning, and strategies encompassing all financial matters. The team guides and counsels clients in federal, state and local taxation in addition to sub-specialty area’s within taxation, including business tax, individual tax, IRS matters, estate, gift and trust services and international tax planning.