Dear Attorney Tully:I am a 76-year-old widow and, now that autumn is upon us, I will shortly be leaving for my winter home in Florida. My family always sends me your column, “Senior Signals,” which I very much enjoy reading. Over time, you’ve written a lot of articles about Medicaid law changes and how it is harder to protect one’s assets. My question is, I am considering becoming a Florida resident. Will this help me with this negative law?
Answer: Yes. The Deficit Reduction Act is a federal law that affects every state. However, every state is allowed some flexibility in how the Medicaid program is administered. Connecticut is nationally known by elder law attorneys as being one of the most conservative and difficult states for seniors to protect their assets. Florida, on the other hand, is much more liberal in allowing its senior residents to protect their assets.
Many different, longstanding and tested planning options exist in Florida for married couples and individuals that are not available to those of us in Connecticut. It is very common for our retiring clients to move to warmer climates. The warmer states are appealing to elderly clients for various reasons such as: sunny weather, low or no taxes, low cost of living and access to services for the retiring and elderly.
Many of our clients also move to the warm weather during the winter months and return home to their permanent residence in the spring. These are our “snowbird” clients. A common scenario in an elder law practice arises when a “snowbird” client asks the attorney to review or prepare estate planning documents which may be used in more than one jurisdiction.
Clients moving to another state often do not want to have two sets of essential planning documents. Furthermore, for many clients, the fees involved in having documents drafted in more than one jurisdiction may be prohibitive.
There are many tax differences between Connecticut and Florida. The most significant ones are in the areas of income and estate taxes. Connecticut has estate and gift taxes. While the changes to the gift tax allow families to move more assets tax free, the changes to the estate tax are more punitive on families with larger estates.
It is important that you weigh the pros and cons of changing your residency. Numerous factors, beyond taxes and asset protection, play a role in selecting where to live, such as access to family, your doctors and medical care, transportation and social issues.
In light of some of the negative tax and Medicaid law, it is worth exploring where you domicile. This does not mean that you couldn’t come to back to Connecticut to visit each summer.