Many older Americans have held a life-long dream of owning a second home in a new location, whether it be for warmer climates, favorite lifestyle activities or even the pull of grown children and grandchildren. But, does it make sense for everyone? Is being a ‘snowbird’ right for you? As CNBC reports, there are many factors to consider before making this all-important life decision.
“If you’re a would-be snowbird, it pays to do some financial planning before you take flight. There can be numerous advantages to picking one place over another, he said — several states have no income tax, and others have tax breaks on retirement income and on real estate taxes for older residents. Estate taxes can also be more favorable in some states than in others.”
Remember, you can only have one primary residence or domicile, so consider not just the financials of your prospective state, but also the physical and emotional logistics of the move before making it permanent. Lawyer John J. Scroggin, an accredited estate planner and partner with Roswell, Georgia-based law firm Scroggin & Co, cautions that one of the biggest financial considerations is the tax implications of the state you choose, so take your time.
“Becoming a snowbird can be a big move, so give it a test run first. Scroggin said many of his clients find they miss their families and friends too much to spend the bulk of their time in that once-dream locale. “Don’t go buy a place right away,” he said. “Go down and rent for a few months and see how you really adjust.”
As an agent, you can help your clients consider a ‘snowbird’ situation by recommending tax and estate planners, referring them to a trusted agent in their chosen location to get them started on the other end, and being patient as your client weighs their options.