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Your Bank > Education and Advice > CNB University

Avoid “Taxing” Moves When You Retire

Lynn Carleton
Lynn M. Carleton, CTFA, CSNP is Vice President - Trust Administration Officer and can be reached at LCarleton@CNBank.com or (585) 419-0670 x50683.

Relocating after retirement may be one of your dreams, but make sure you’re wide awake when you do your planning. Not all states are created equal when it comes to taxes. Before you make a move, check out state and local tax laws to avoid unpleasant — and potentially costly — surprises.

Less Is More in Your Pocket

State income taxes can take a bite out of your retirement savings. Moving to a low- or no-tax state could save you a substantial amount of money. If you relocate to a state with an income tax, find out in advance how much you can expect to pay.

Less Is More for Your Heirs

Currently, the federal estate-tax exemption is $5 million*. But some states also impose estate taxes, often with a much lower exemption amount than at the federal level. If estate taxes are a concern, check state laws before you move.

Look at Everything

Income and estate aren’t the only taxes you need to consider. Look at state and local sales and property taxes as well. States that are popular relocation destinations may experience rising property values, which can mean higher property taxes. Be sure to evaluate the whole tax situation, not just one aspect of it.

Some States Give You a Break

A number of states, including Florida, offer tax breaks to retirees, such as excluding distributions from qualified retirement plans, individual retirement accounts, and trusts from state income taxes.

Specifically, Florida has long been an attractive option with no state income tax, and no estate or inheritance tax, for trusts domiciled in Florida. Because Florida does not tax trust income or capital gains, over time this can have a significant positive impact to your trust, in particular for generation skipping trusts.

How We Can Help

Based in Sarasota, our affiliate, Canandaigua National Trust Company of Florida can help re-establish your trust assets in Florida as your Trustee to benefit from potential tax savings. Contact us at 585-419-0670 to learn more.

* For 2011 and 2012; subject to inflation adjustment for 2012. Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Bank & Trust nor Canandaigua National Trust Company of Florida provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.

 

This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.