State Residency Laws For Saving on Taxes – PillarWM
As an investor, you may have settled down in a specific state for both business and personal reasons. However, you might be considering changing your state residency for tax purposes. If you intend to do this, you will need to understand state residency laws and how one qualifies for residency. A wealth manager can offer guidance with changing your residence and inform you about the different ways you can benefit from tax planning. You can learn more about tax planning by requesting a free copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Table of Contents
Table of Contents
Why You Need to Know State Residency Laws
It’s no secret that each state has its own tax laws and tax rates that residents are subject to. Unfortunately, this means that many people grow up in states with sky-high tax rates. Please speak with our wealth managers to learn about changing your residency for tax purposes.
The states that have the highest income tax rates are as follows:
1. California: 13.3%
2. Hawaii: 11%
3. New Jersey: 10.75%
4. Oregon: 9.9%
5. Minnesota: 9.85%
6. District of Columbia: 8.95%
7. New York: 8.82%
8. Vermont: 8.75%
9. Iowa: 8.53%
10. Wisconsin: 7.65%
If you live in any of these states, you may be interested in moving to another one and establishing your residency there. However, it would help if you understood how state residency is determined and whether you will need to pay any taxes in your original state after you move.
How to Change Your State Residency
Investors who wish to change their state residency may need to follow multiple steps to ensure that change is official and complete. This is because many states will still tax you if you have any of your original ties to them.
So how do you change your state residency? This is generally a legal process, so it is essential to get in touch with legal advisors and tax advisors for guidance on this matter. However, some of the steps investors typically take when changing their state residency include:
• Cancelling your original state’s driver’s license and obtaining one in your new state.
• Registering your state in the new state and informing your insurance company about the change.
• Registering to vote in the new state and cancelling your voter registration in your previous state.
• Changing your religious affiliation or membership with a local group or place of worship to that in a new state. It would help if you also made contributions to these groups or places in your new state.
• Purchasing a home in your new state and selling off the one in your original state. Alternatively, you can transfer ownership of your old home to family members or others.
• Altering your estate planning documents such as trusts, wills, and advance care directives to include your new state.
• Changing your existing bank accounts to ones in your new state.
• Moving any safe deposit boxes to your new state.
• Informing the IRS about your address change.
• Engaging in economic, financial, and social activities in your new state.
How Long Should You Avoid Your Original State to Change Residency?
In addition to following the steps mentioned above, you may need to stay out of your home state for a certain period. You may be wondering, “How long do I have to live somewhere to be considered a resident?” You should remain present in your new state for a minimum of 183 days if you wish to be counted as a resident.
This would be the same period if you were wondering, “How long does it take for a house guest to establish residency?” Investors should keep in mind that simply living in their new state for this period won’t guarantee that their original state won’t tax them. For this reason, it is vital to get in touch with tax and legal advisors to see what other changes you must make. Please talk with any of our wealth managers to learn more about changing your state residency.
Living in Another State Without Becoming a Resident
You may also be wondering how long can you live in another state without becoming a resident. The 183 day rule applies in this situation too. So if you spend 182 days or less in another state, you won’t be considered a resident. However, it is important to note that spending even a few hours in another state can count as a full day. So you should be careful not to go over this limit if you wish to retain residency in your original state.
Who to Turn to for Assistance With Changing Your State Residency
Changing your state residency is a vital task for investors that wish to save on taxes and start a future elsewhere. However, this process can be a bit more complicated than most people realize. For this reason, you should turn to a professional for assistance on this matter.
Both legal advisors and tax advisors can offer advice on changing your state residency for tax purposes. However, many investors reach out to wealth managers for assistance as well.
How a Wealth Manager Can Help You
Investors that have never used wealth management services before may be wondering what a wealth manager is. This refers to a unique type of financial advisor that offers services exclusively for clients with a high net worth or an ultra-high net worth. They are knowledgeable in a variety of areas and offer numerous services, including:
• Asset Advisory and Management
• Tax Planning
• Estate Planning
• Retirement Planning
Each of the aforementioned services can be useful if you are considering changing your state residency. Please talk with one of our wealth managers to find out more about their services.
Asset Advisory and Management
Investors can reach out to wealth managers for assistance with their assets. This includes advice on financial decisions related to their assets. For example, a wealth manager can help you decide what to do with your assets in your home state when you decide to move to another state for tax purposes.
Wealth managers also specialize in managing assets. This means you can ask them to conduct trading activities on your behalf while you focus on other wealth-building activities. These professionals can provide regular updates on your portfolio performance while you focus your attention elsewhere. You can learn about some great strategies to improve your portfolio performance by checking out our special guide.
Tax planning services are vital for any investors that wish to save on taxes without breaking any laws. A wealth manager can help you in deciding which state to establish your residency in for tax purposes. In addition to this, they can help you make your portfolio more tax efficient. This includes strategies for choosing investments. You can learn about some useful portfolio growth strategies by reading our special guide.
Investors who wish to pass their wealth to their children and beneficiaries with minimal costs and delays can benefit from estate planning services. A wealth manager can help you set up a will and trusts in your new state so that you maintain control of your wealth after your passing. You can learn more about the importance of estate planning by requesting a free copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.
Investors may also need to decide which state they wish to reside in when planning for retirement. This is crucial, as settling in a state with high taxes will reduce your earnings from your investments. This could become an issue if you were banking on your asset earnings to fund your retirement lifestyle.
A wealth manager can help you align your choice of state with your retirement goals and offer advice on how you can achieve your dream retirement.
Qualities of a Good Wealth Manager
There are numerous wealth management firms that cater to clients across the country. The wealth managers at these firms may vary in terms of quality. Therefore, it is vital to be able to distinguish between the good ones and the less suitable ones.
Some of the qualities that a good wealth manager must possess include:
Experience is considered invaluable in the wealth management field. This is because wealth managers learn much of what they know by helping clients over a long period of time. They observe the various challenges their clients experience and offer solutions to help them overcome them. This allows them to gauge what strategies work or do not work.
When choosing a wealth manager, you should always go for one that has been practicing for many years or decades.
Wealth managers offer a wide range of services for high net worth and ultra-high net worth investors. This means they must possess in-depth knowledge in many different areas.
You can always gauge a wealth manager’s expertise by talking with them or by reading past reviews left by their clients. Additionally, you can ask the wealth manager some of the questions we outline in our guide to choosing a financial advisor.
There is no point in hiring a wealth manager if they are difficult to reach. The ideal wealth manager always makes time for their clients and offers multiple ways to get in touch with them.
Wealth management can be complicated because each investor has unique needs and goals they wish to achieve. In addition to this, each one may also have a different level of financial knowledge. This means a financial plan that works for one investor might not necessarily work for another.
For this reason, wealth managers must offer personalized services and plans for each of their clients.
Why Choose Pillar Wealth Management?
Changing your state residency for tax purposes can be tricky, especially if you have many assets in your home state. You can reach out to many different wealth management firms for assistance, but few provide the quality of services and individual attention we offer at Pillar Wealth Management.
Investors with $5 million to $500 million to invest often reach out to us because they trust our wealth managers’ sixty years of industry experience. We strive to maintain regular communication with each of our clients and help you establish your residency in a new state.
Start saving on taxes as soon as possible with Pillar Wealth Management’s assistance. Please contact us for a special free introductory meeting with our wealth managers.
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