Over the last almost 24 months, a number of my clients have accelerated their decisions to move out of the Commonwealth of Massachusetts. For estate planning purposes, this is a bigger decision than simply a change of address and setting up a home office in a new state. What are the major considerations with respect to:
- Estate Planning Documents
- Estate Tax Exposure
With regard to estate planning documents, all are state-specific. While the documents we generate together contemplate needing to use them elsewhere (Power of Attorney, Health Care Proxy, etc.), each supposes you are a MA resident. If that is no longer the case you would need to review our documents with an estate planning attorney in your new state and at a minimum get a new Health Care Proxy and new Power of Attorney.
According to Mass.gov – “[y]ou cannot change your domicile by taking a temporary or longer than expected absence from Massachusetts. You must not intend to return…you must have declared your intent [to change your domicile] and taken steps to do so. Your declaration of intent will be examined closely. If you assert that your domicile has changed, you bear the burden of proving that fact.”
You are considered a MA resident if you “[s]pend a total of more than 183 days of the tax year in Massachusetts, including days spent partially in Massachusetts.” If a non-resident spends part of the year residing in Massachusetts and earns more than $8,000 of income from Massachusetts sources, they will be required to file a Massachusetts income tax return for non-residents.
If you have not “taken appropriate steps,” you and your assets may still be subject to the MA estate tax upon your passing. This is significant since MA taxes our assets, at death, if they exceed $1 million, and most other states do not have a state estate tax. The MA Department of Revenue looks for specific indicia of relocation. Some more obvious examples are: (from mass.gov)
- You’ve purchased or leased a new home or an apartment in the new location
- You’ve moved personal property to the new location
- You got permanent employment in the new location
- You canceled Massachusetts bank accounts and opened new accounts in the new location
- You sold real property in Massachusetts or canceled leases
- You issued address change notices
- You changed voter registration and actually vote in the new state
- You got a driver’s license and automobile registration in the new location
- You changed membership in churches and clubs
- Generally, you’re involved in the new community
Some less obvious examples are:
- If your new state offers a homestead exemption for your primary residence, apply for the benefits
- If you hold any licenses for fishing or hunting in Massachusetts, make sure that you update the licenses to reflect a non-resident status
- Update firearms licenses to your new state
- Find new medical professionals in the new state and notify your prior health care professionals of your relocation. Be sure to have any prior records transferred to the professionals in the new state. If you vacation in Massachusetts, you can maintain these relationships, but be sure to find professionals in your new home state as well.
The burden of proof rests with you, the taxpayer, so keep good records.