By Bernard A. Krooks, Esq.
Many New Yorkers have embraced a decidedly mobile lifestyle. They think nothing of seasonal migrations in search of temperate weather. Their families may be far-flung, prompting frequent out-of-state visits or they may be trying out a potential retirement spot. We account for the highest percentage of Florida’s temporary residents, often opting to call it home.
But while it’s simple to buy a plane ticket and have the mail forwarded, legal documents don’t always cross state lines so easily. Differences in state law can have big implications for estate planning and long-term care. In some cases, one jurisdiction may not even recognize documents drafted elsewhere due to differences in execution requirements. And you could face unexpected tax bills as governments struggle to fill their depleted coffers.
Generally speaking, spending 183 or more days per year in a location will make you subject to local residency requirements. If you maintain your legal residence in one state for purposes of voting and taxation, but spend significant time elsewhere, it pays to do some contingency planning.
At a minimum, you should discuss your residency situation when you meet with your attorney to review your will, trusts and other important estate planning instruments. It may be wise to consult an attorney in each state to ensure that you’re in compliance with all regulations and that you take full advantage of any favorable differences. I’ve had an increasing number of clients ask about the benefits of having attorneys collaborate across jurisdictions. Parents had begun spending more time in Florida, or due to frailty, were moving back to New York to be closer to family, and they didn’t want to suddenly discover that careful estate planning had been rendered invalid.
While a well-drafted trust can stipulate that it be administered according to the laws of the originating state, it may not be advisable to have one state interpret the statutes of another. Other documents may prove even more challenging. An advance directive can become entangled by something as seemingly trivial as the number of witnesses to your signature. As a result, doctors and hospitals may fail to respect living wills or health care proxies. Banks may not recognize financial powers of attorney. The result could be chaos when you’re least prepared to cope.
Probate, the procedure through which property is transferred to heirs, poses more questions. This process typically takes place where the decedent was domiciled, but if real estate is owned in more than one state, probate must be initiated in each location, possibly involving different deadlines. Even if the decedent was legally resident elsewhere, states have been known to claim estate taxes when local ties were extensive enough.
Over 70 percent of New York nursing home expenses end up being covered by Medicaid, but eligibility and covered services vary by state. So it pays to understand how to navigate the system where ever you or your parents plan to spend your senior years. In addition, there’s growing interest in “filial responsibility” loans, under which adult offspring could be held accountable for the older generation’s expenses. So if Mom or Dad suddenly requires nursing home care that isn’t covered by Medicaid-even for a few months- a son or a daughter could suddenly become liable for huge bills. While New York does not currently hold adult children liable for their parents’ nursing home costs, in a recent case in Pennsylvania, a court held an adult son responsible for his mom’s nursing home expenses.
Since Florida has no state income tax, it could be tempting to declare yourself a resident if you pass the 183-day test, but New York is particularly aggressive about claiming taxes from individuals with connections here. You need to take steps to relinquish your New York residency, including the divestiture of real estate holdings. New York residency audits are on the increase, and you’ll bear the burden of proof, including documentation of how long you’ve spent where. Failure to present a compelling case could leave you responsible for state taxes.
Don’t let legal snarls complicate your chosen lifestyle. A second home and carefree travel are often the fruit of a lifetime’s effort. With a little research and planning, you can avoid untimely complications.
For more information, visit www.elderlawnewyork.com.