Does NJ residency make sense now?

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Q. I’m a resident of Florida but I also have a home in New Jersey. With the changes to the estate tax, could it make sense to change my residency back to New Jersey, where I’d rather be? I have about $3 million in assets, and my income of about $80,000 a year comes from RMDs, a small pension and Social Security.
— Torn

A. New Jersey’s recent estate tax changes do make the state more tax-friendly for retirees.

As of Jan. 1, 2018 New Jersey will no longer have an estate tax, while Florida has not had an estate tax since it was eliminated in 2004, said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

He said if estate tax avoidance was the reason you changed your residency to Florida, that would no longer be necessary as of Jan. 1, 2018.

However, Hauptman said, New Jersey still has an inheritance tax while Florida does not.

“If you intend to leave your estate to your spouse, children or grandchildren — Class ‘A’ beneficiaries — then New Jersey inheritance tax does not apply,” he said. “On the other hand, if you are leaving your estate to other non-Class `A’ beneficiaries, then inheritance tax would be due.”

Hauptman said becoming a resident of New Jersey in that case would subject your estate, including your investments, bank accounts and other items, but not your Florida real estate, to the inheritance tax. Remaining a Florida resident only subjects your New Jersey home to inheritance tax but not your investments, bank accounts and other accounts, or your Florida real estate.

“Of course there are other income tax considerations to changing your residence, specifically state income tax,” he said.

You can speak to your tax preparer for details on how a move would affect your income tax, and here’s some background to help you start the conversation.

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This post was first published in December 2016. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.