Pennsylvania residents who like to spend part of the year at home and winter months in warmer climes may consider extending this lifestyle into their retirement years. They should mindful of which state they claim as their legal residence, as it can have an effect on how which strategies they should employ for their estate planning. This may be particularly important for individuals with substantial assets.
For 2016, the federal estate and gift tax exemption is $5.45 million for individuals and $10.9 million for married couples. The vast majority of Americans accordingly are not affected by this issue, but many states have their own estate taxes, and the exemptions in many cases are far lower. For example, New Hampshire does not assess an estate tax. Several years ago, Massachusetts updated its laws so that its state estate tax exemption was increased to $1 million. While Florida does assess a variety of taxes on a deceased individual's estate, it does not have an estate tax. California does not have an estate tax either.
There are other considerations that can come into play for people who own homes or have bank accounts in more than one state. When they die, their executors will have to go through the probate process in multiple jurisdictions. This can be both expensive and time-consuming, and it can delay the distribution of those assets to beneficiaries. One way to avoid this is to put assets into a trust. In this manner, the probate process can be avoided and assets can be passed on far more quickly.
There are other estate planning ideas that an attorney can explore with a client who owns property in more than one state. One suggestion could be the preparation of powers of attorney for each state, allowing a trusted individual to make decisions with respect to those assets if the owner becomes incapacitated and is unable to do so.