3 Financial Considerations for New Residents in Brevard
As any Floridian knows, May typically marks the time when many of our out-of-state visitors or part-time residents head back to their permanent homes. You may have read that more people are moving to Florida due to COVID-19 or for more affordable rent.
In fact, many begin as vacationers, evolve into secondary residents, and eventually become new residents in Brevard upon retirement or as family members relocate to Florida.
The mix of “native” Floridians and new residents relocating from other states for Florida’s weather and beaches makes the cultural and social atmosphere of Florida unique. However, seasonal residents and those who are planning to become permanent members of our community should be aware of 3 certain considerations:
- Issues Related to Domicile and Residency.
If you are a resident of a state, you will be subject to income tax in that state. However, even non-residents may be subject to state income tax if they receive income from property located in the taxing state or earn income from employment within that state. Although Florida does not impose state income tax (or state estate tax or inheritance tax), for many secondary residents, their original state does impose one or more of these taxes.
You can only have one domicile at a time. To change your domicile, you must show “clear and convincing evidence” of your intent to change. For example: if you sell your New York residence and purchase a Florida home (and do not maintain a residence in New York). Then you would become a permanent resident in Florida.
Other supportive factors include the following: changing your driver’s license, vehicle registration, and mailing address; registering to vote in your new state, becoming a member of a church or civic organization in your new locale, etc. However, these factors alone may not be sufficient.
Additionally, you can change your domicile but still be taxed in the prior state. A non-domiciliary who maintains a home in a state for substantially the entire year and spends more than 183 days per year within that state is deemed to be a “statutory resident” and can be subject to tax in the non-domiciliary state, regardless of a domicile change.
Individuals who rent their homes (such as Airbnb) must be careful of certain rules related to tax on rental income in the rental jurisdiction (and potentially in their “home” state as well).
- Florida’s Homestead Protections; Statutory Elective Share.
Florida has very specific protections with respect to your primary residence, especially if you have a spouse. Additionally, Florida statutes provide for a statutory share of your estate to be “guaranteed” to your spouse, and recent changes to the law have expanded the kinds of assets that are subject to this guarantee. Individuals who are considering becoming a permanent resident in Florida should be mindful of how these provisions of Florida law affect their overall estate plan.
- Florida Power of Attorney Act written in 2011 (affects all powers of attorney used in Florida (including those executed in other jurisdictions)).
If you change your permanent residency, it is wise to seek the advice of counsel in your new state with respect to whether your estate planning documents need to be updated. Additionally, if you are a secondary resident, you may consider maintaining a set of “emergency” documents (such as advance healthcare directives), in each jurisdiction in which you spend significant time, to guard against the lack of any national consensus about the treatment of out-of-state documents.
Regardless of whether you are staying in Brevard for a short time, or becoming a new resident in Brevard, it is always wise to seek the advice of local counsel and tax professionals, to ensure you are maximizing the benefits available in Florida while minimizing any concerns. Contact our Melbourne Estate Planning Attorneys today for a consultation.