There are a lot of reasons why you may want to establish residency in another state, besides the obvious (you just moved).
Maybe you have a child going to an expensive college soon and you want to establish residency for in-state tuition.
Maybe you’re currently living in a high tax state and you want to pay little to no tax in another state.
Maybe you want to move out of the country and realize that some states like California follow you forever for tax. (The strategy there is to go establish residency in a state that has no state income tax first.)
If you just kind of pass on the whole thing with multiple homes, at some point, both states (or all of them if you have houses in more than two states) are going to claim you are a resident. And if you die, the estate probate is a nightmare, with every state claiming they have jurisdiction
It makes sense to purposely determine your state of residency.
Here is some action you should take if you want to claim residency:
- Change your mailing address to the new state,
- Change your driver’s license,
- Change the registration of your cars and other vehicles,
- Register to vote in the new state,
- Open and use bank accounts in the new state,
- File a resident’s tax return in the new state (if required),
- Buy or lease a home in the new state, and
- Change your address on all important documents such as your investment accounts, insurance policies, credit cards, wills, living trusts and passports,
It is possible to still keep your home in the other state, but it is going to look a little fishy if it’s a big home you own in your old state and rent a small apartment in the new home state. In that case, keep a log to show your intent is to establish residency in the new home state.
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