Magazine article Public Management

Factors in Establishing a New Residency

Magazine article Public Management

Factors in Establishing a New Residency

Article excerpt

Even in today's mobile society, individuals fail to recognize the importance of properly establishing legal residency when they move from one state to another. Since a taxpayer's state of residence is entitled to tax all of his or her income, failure to abandon an old residence can cause unfavorable tax consequences. At death, the state of residence also can tax all of an individual's intangible assets, regardless of location, as well as all property located within the state.

The checklist below outlines some steps that individuals can take to abandon an old residence and clearly establish a new one. (Note: Even when residency is clearly established, some states still try to tax a former resident's income, particularly pension benefits accumulated in the state. Residency audits often begin with an extensive questionnaire that should not be completed without a CPA's advice.)

* Sell residence in the old state, and buy or lease a house or apartment in the new state.

* Apply for and obtain a homestead exemption in the new state.

* Move physical assets from the old state to the new one.

* Sever business relationships in the old state.

* Close bank and brokerage accounts in the old state, and open accounts in the new one.

* Rent a safe deposit box in the new state.

* Have an attorney in the new state review estate plan and draft a new will indicating that the individual is a resident of that state.

* File an affidavit of residency in the new state with the county clerk's office. …

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