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Part-time Florida residents may need to know two states' laws

Many people live in Florida for part of the year, then go to north to another state for the rest of it. These so-called "snowbirds" are often older people who have retired and can make the journey without work-related constraints. Because of this, these are individuals who are more likely to be thinking of their estate planning needs than people in the middle of their work life.

While there are many lifestyle benefits to having residences in two states, there are some pitfalls, especially when planning for the future. People who have multi-state residences may need to think a little harder about their estate plan to ensure that their wishes are carried out and that their heirs can get the most out of their inheritance.

First, while the federal estate tax exemption is currently set at over $5 million, many states have much lower thresholds. It is therefore important that people with two residents decide what state will be their "primary residence" and what needs to be done to meet the state law requirements to qualify as such. Florida may be a good choice for some, as there is, at the moment, no estate tax, but other taxes are levied on estates and other factors may come into play.

Secondly, owning property in two states may mean going through to separate probate processes. This could end up being very costly and time-consuming for the heirs of the estate. It is possible, in such circumstances, that setting up a revocable trust may help with some of these issues.

Finally, it is likely very important for dual residents to have powers of attorney and medical or healthcare proxies drawn up to adhere to both states legal standards or to have two separate sets. Because incapacity often happens suddenly and without warning, it is unlikely people will be able to choose which state they are in when it happens.

Having an estate plan is important for everyone, and making certain that all documents are up to legal standards and clear and enforceable is a must. Because of the various complications for part-time residents, it is even more essential that "snowbirds" explore all the legal ramifications of their estate plan, and have all documents up-to-date, so they can enjoy the respective benefits of their two residential states.

Source: CBS Boston, "How To Protect Your Estate While Living In Two States," Dee Lee, Oct. 18, 2013

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