Many families we work with ask some version of the same question: “Would we be better off moving?” Whether it is Minnesota, California, Illinois, New York, or another high-tax state, clients often wonder if relocating could meaningfully improve their financial picture.
The question is understandable and well-founded. State income taxes, estate taxes, property taxes, and regulatory changes vary widely state to state and receive significant attention, particularly among retirees, high-income families, and business owners. On paper, moving to a state with lower taxes can appear to produce substantial savings.
The reality, however, is that changing state residency should not be just a tax decision. In our experience, the most successful transitions occur when financial benefits align with lifestyle goals, family priorities, and long-term planning considerations.
For a retired couple with $400,000 of annual income and an $8 million estate, relocating from a high-tax state to a state with no income tax and no state estate tax could potentially save hundreds of thousands of dollars over time. The challenge is that those savings must be weighed against family proximity, travel costs, healthcare access, and the aggregated costs of maintaining multiple residences. There may also be other financial trade-offs, such as higher property taxes, sales taxes, and insurance costs for example.
The Tax Savings Can Be Meaningful:
For high-income households, certain states offer notable tax advantages. Retirees who are no longer tied to a specific location often evaluate residency in states that have no state income tax. Estate planning may create additional incentives. Some states impose their own estate taxes, independent of federal estate taxes, while others do not [Ex. Minnesota imposes an estate tax on individuals whose estate exceeds $3M]. For families whose net worth exceeds those thresholds, avoiding state-level estate taxes can preserve significant assets for future generations. From a purely mathematical perspective, the potential savings can be compelling, but we recommend considering other factors as well.
Where Is Your Family?
One of the first and often most difficult questions we ask clients considering a move has little to do with taxes: Where do the people you care about live? How difficult will it become to get together? Being present for grandchildren’s sporting events, holiday gatherings, family milestones, and times of need often outweigh potential financial benefits.
The question is not simply, “Where can I pay less tax?” The better question is, “Where can I live my best life while maintaining financial flexibility, family connection, and peace of mind?”
Lifestyle Matters More Than Most People Expect:
Many clients initially focus on what they are leaving behind. We encourage them to think equally about the new lifestyle they are seeking, perhaps a community that offers access to activities and social connections that can ensure a long, happy and active retirement.
The Hidden Costs of Maintaining Two Homes:
The costs and demands of maintaining two homes can add up quickly, including property taxes, insurance, utilities, upkeep, travel, and administrative responsibilities. Families often underestimate both the financial burden and the time required to manage multiple residences. As a result, many eventually reconsider whether owning two homes is worthwhile and explore alternatives, such as renting for extended periods or selling the property in the state they are leaving before purchasing a new home in their destination state.
Healthcare Becomes Increasingly Important:
Healthcare access is easy to overlook when considering a move, but it becomes increasingly important over time. As parents age, adult children may need to attend appointments, coordinate consultations, and help secure appropriate care. Before relocating, families should assess the availability, quality, and cost of healthcare in the new community.
A Planning Decision, Not Just a Tax Decision:
Tax savings matter. Estate planning opportunities matter. However, family relationships, lifestyle preferences, healthcare access, and the realities of maintaining multiple homes deserve equal consideration.
Here is an example checklist for you to consider when evaluating a retirement venue:
- Do we have Friends or Family Nearby, i.e. Already There?
- Access to Outdoor Activities Nearby, i.e. Walkable Pickleball, Bike and Hiking Trails
- What is the Social Environment in the Neighborhood or Community?
- Walkable Restaurants, Shops, Coffee
- Warm/Moderate Climate
- Direct Flight from “Home Base” Airport; Reasonable Drive to the “Winter” Airport
- Drive Time to Access Healthcare
- Walkable or Reasonable Drive to the Ocean (or Other Desirable Venues)
- No Estate or Inheritance Tax
- Low/No State Income Tax
- Favorable Treatment of Retirement Distributions and/or Social Security
Final Thoughts:
Changing states can create meaningful financial advantages. However, in our experience, the best decisions are rarely driven by financial considerations alone. As with many planning decisions, the answer is highly personal and requires a holistic planning approach. We encourage you to reach out so we can help you thoughtfully evaluate the opportunities, tradeoffs, and planning considerations involved.