State of Domicile Change / Moving in Retirement
Planning for Taxes, Lifestyle, and Expenses When Relocating
It is not uncommon for individuals to relocate in retirement, whether to be closer to family, enjoy a different climate, reduce taxes, or improve overall quality of life. While moving can be an exciting transition, it also introduces a number of financial planning, tax, and legal considerations that must be addressed well in advance.
When we develop retirement projections for clients who are considering a move—or maintaining homes in multiple states—we incorporate projected changes to taxes, housing costs, healthcare, and estate planning to ensure there are no surprises.
Tax Planning and Domicile in Retirement
Changing your state of domicile is not as simple as changing your mailing address.
States apply specific rules to determine where you are legally domiciled, and those rules can have a meaningful impact on:
State income taxes
Taxation of Social Security
Taxation of pensions and retirement account distributions
Capital gains taxes
Estate and inheritance taxes
For individuals who own homes in more than one state, the difference between being domiciled in one state versus another can materially affect their lifetime tax liability.
What It Takes to Establish a New State of Domicile
States maintain a long list of criteria to determine true domicile. These can include:
Registering your vehicle in the new state
Obtaining a new driver’s license
Registering to vote
Filing resident state tax returns
Establishing primary banking and medical relationships
Spending the majority of your time in the new state
In some cases, states may even review:
Credit card statements
Travel patterns
Utility usage
We educate clients on these rules so they understand how to properly establish domicile and avoid costly disputes.
Owning Homes in Multiple States
Some retirees maintain two residences. When this occurs, it becomes critical to determine:
Which state is considered your primary residence
Where you spend the majority of your time
Which state has the right to tax your income
Without clear planning and documentation, owning homes in multiple states can create tax complexity and potential audits.
Healthcare Considerations When Moving
Healthcare planning can change significantly when relocating.
Important considerations include:
Medicare Advantage vs. Medicare Supplement availability
ACA exchange plans prior to age 65
Provider networks and access to care
Prescription coverage differences by state
Healthcare costs and plan options can vary widely depending on where you live.
Long-Term Care and Medicaid Rules
Long-term care planning is another critical consideration when changing states.
Medicaid rules:
Vary significantly by state
Define what assets are countable vs. exempt
Impact eligibility for long-term care benefits
A strategy that works in one state may not work in another, which is why domicile decisions must be coordinated with long-term care planning.
Estate Planning Implications
Your state of domicile governs estate laws, including:
Probate rules
Estate tax thresholds
Trust and power of attorney requirements
For many individuals, moving to a new state requires updating:
Wills
Trusts
Powers of attorney
Healthcare proxies
Failing to update estate documents can lead to unintended legal and tax consequences.
Buying a Second Home vs. Long-term Rentals in Retirement
For clients considering a second home, important questions include:
Should the purchase happen before or after retirement?
Should cash be used or financing obtained?
How does the purchase impact liquidity and cash flow?
Would long-term rentals be more convenient and cost-effective?
In many cases, renting offers greater flexibility and less financial risk than ownership.
Our Role in Domicile and Relocation Planning
At Greenbush Financial Group, we help clients:
Model tax differences between states
Understand domicile requirements
Evaluate housing decisions
Coordinate healthcare and long-term care planning
Understand the impact on their estate plan
The goal is to ensure that relocation decisions enhance—not disrupt—retirement security.
Our State of Domicile Change Articles
“Thanks for pointing out the potential minefield ahead of folks who chose to move to Florida. Very informative.”
This endorsement provided for Greenbush Financial Group, LLC on YouTube was a non-solicited and non-paid comment by a non-client.
Frequently Asked Questions About Changing State of Domicile or Moving in Retirement
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What does it mean to change your state of domicile?It means legally establishing a new primary residence for tax and legal purposes.
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Can I choose which state taxes me if I own homes in multiple states?No. States apply specific rules to determine your true domicile.
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Do all states tax Social Security and retirement income?No. Tax treatment of Social Security, pensions, and retirement accounts varies by state.
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How do states verify where I am domiciled?States may review licenses, voter registration, tax filings, and even spending patterns.
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Do I need to update my estate documents if I move?Often yes. Estate laws and tax rules differ by state.
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How does moving affect Medicare and healthcare coverage?Plan availability, provider networks, and costs can change significantly by state.
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Is buying a second home always better than renting in retirement?Not necessarily. Renting can offer flexibility and lower financial risk.
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When should I start planning a domicile change?Ideally at least one to two years in advance to ensure compliance and tax efficiency.
Contact Us . . . .
All of our services start with a complimentary consult. No high pressure sales tactics. We are financial planners, not salesmen.
About Our Firm: Greenbush Financial Group is an independent registered investment advisory firm based in Albany, New York, that provides four main services to clients: fee-based financial planning services, investment management, employer-sponsored retirement plans, and retirement planning services. The firm serves clients locally in the Albany region and virtually across the United States.
