Tax Implications of Moving

When you move to a different state, you should note that both states may be able to tax your estate when you die. There have been cases where an estate has been taxed by as many as four states, leaving nothing behind for heirs to fight over.

Each state has its own rules as to what constitutes legal residency, and the courts tend to side with them inspite of the simple fact that a person can only have one permanent domicile. Domicile and residency are not the same thing.

So, what this boils down to is this: if you move to another state, make a complete and clean break from your "old" state. Move bank accounts. Hire new accountants, attorneys etc. in your new state. Leave nothing in the old state that could be construed as ties that might be determined as residency. This includes any rental properties, investments, business holdings, and even charities that you donate to.

The more you do to prove that you no longer have any ties to a state, the weaker becomes their claim on you when it comes to taxation.

And, no, just because you are married does not mean you must both be residents of the same state for tax purposes. But if you choose dual state citizenship, understand that you could be jeopardizing a big chunk of your estate when you die.