Much To Do Before Snowbirds Flock South For Winter

Many South Fork residents head south in search of warmer destinations during the cold, blustery months. These part-time residents—nicknamed “snowbirds” for their migratory tendencies—rent out or shutter their Hamptons homes while they are away, and stay for several months at a time in popular locations for Northeast retirees, including the Carolinas, Texas and Florida.

But not so fast, says Meg Rudansky, an elder law and estate planning attorney in Sag Harbor.

The Press: What should snowbirds consider doing before moving south for the winter?

Meg Rudansky: People need to determine what is the primary state. One state is going to be the residence state, and that person would be governed by the rules of that state.

For example, Florida has no income taxes—but you have to be a resident of Florida to take advantage of that policy. That’s one of the issues when it comes to dual residence. The state that you claim as your primary residence governs your taxes and your long-term care concerns.

Medicaid, for instance, pays for long-term care in a nursing home and home care. It’s a federal program, but the states are able to fashion their own version of the program within certain guidelines. And there are significant differences from one state to the other. New York is an extremely generous Medicaid state, which is not available in most other states.

From a tax point of view, Florida is very generous. There is no state income tax. There is no state estate tax. So if someone has a larger estate, it might more sense to move down to Florida and make that a primary jurisdiction.

It’s one thing to say, “This is my home state,” but it’s another thing to have a state buy into that.

What are some of the procedures to make the switch?

There is a need to establish that fact by changing voter registration, [driver’s] license and where you file your income tax returns.

You need to live at a residence for more than half of the year.

I always recommend that if you don’t have estate planning documents in place, you really need to get those. That’s divided between your death documents, including a will—how am I going to distribute my wealth after my death?—and disability documents—who is going to manage my estate for me?

For instance, if you were unable to make medical decisions for yourself, there is something called a health care proxy, where you give someone legal authority to manage your health for you. There is something called power of attorney, which gives someone legal authority to handle your business and legal affairs.

These two documents, if you don’t have them in place and you became incapacitated, which can happen suddenly, then someone would have to go to court and petition the court to become your guardian—at a great expense.

Are these procedures state-specific—say for those moving from New York to Florida?

There are state differences for a will—at least for how one becomes legally binding. Some states have a rule where if it was validly executed in the state where it was drafted up, it would be valid in another state. But not all states have that recognition of other states’ documents.

Sometimes I recommend my clients to find a Florida attorney to draw up new documents to pass muster in Florida.

You may need to update these documents every few years just to make sure that those who are given the legal authority to handle things in any event are still able and willing to take on that responsibility.

What happens to real estate when someone dies?

If someone has, say, real estate in New York and real estate in Florida—and they have a will-based plan, as opposed to a revocable trust—a will needs to be validated through a process of probate.

There might be a later-dated will. It’s not like the executor can go into a bank with a will and a death certificate and cash out. New York real estate would be handled in New York. Florida real estate would be handled in a Florida court.

Basically, probate is the process of proving the correctness of a will. Just because a person at their death has a will doesn’t mean that it was the last will, or of sound mind when the will was signed, or fraudulent. So, the will needs to be validated by the court. The court has to rule that this was the last will. If there was no will, the living heirs would be invited to contest. New York real estate would be handled in New York. Florida real estate would be handled in a Florida court.

This could all be fixed with a revocable living trust, which switches it from two probates to no probates. It’s like a bucket, and you put your assets in there. A pour-over will can direct assets to give everything to the trust. There are three parties involved: the person who sets it up and puts their assets in the bucket, the trustee, and the beneficiaries.

In the event that the person is alive and competent, you manage your assets and you benefit from your assets. If the person lacks capacity to manage their assets, the trustee takes over. And, at death, there is a bucket full of assets, and the trust is dispersed by the trustee, and there is no court involvement.