You can now work from anywhere. So what are you waiting for?
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Work-from-home policies are here to stay.
There is a major shift happening right now in the US workforce where companies are saying that it's okay for their employees to work from home indefinitely or even permanently. So what should you do? I have clients that are living in the Bay Area and New York and they're considering leaving the state and moving to be closer to family, to be able to buy a house, or to have a better standard of living. Whatever it is, if you find yourself in that position where you'd be working in one state and living in another, here are a couple of things to consider.
Understand the tax implications of moving.
Get with a tax expert. You need to be clear on what your state tax obligations are going to be going forward. The Supreme Court ruled in 2015 that two states cannot tax the same earnings, but that being said, things can get complicated really quickly and there's a lot of nuances. Even though some states do have reciprocal agreements and some states have put things out with regards to covid, there are other states that are much less clear. California, for example, can be very aggressive and let's say you've left the state you've established residency in another state, but you find yourself going back to California periodically for meetings, do you need to keep track of those days? Do you need to pay state tax on the earnings for those days? Be clear on that so that there's no surprises at tax time.
Have an attorney in the new state review your estate planning documents.
With regards to your estate planning documents - so that's your wills, your trust, your power of attorneys - it may surprise you to know that those are actually state specific. Don't panic. You likely don't need to completely redo those documents, but I would have an attorney in the new state at least review them to see if there's any major gaps. For example, some states are really restrictive about who can serve as the executor on your estate. Florida is one example, and they say that you need to be a related family member by blood, by marriage, or a Florida resident to serve as an executor. Well, if you just moved from New York and you and you have a New York executor listed, that could be an issue.
You can be happy anywhere.
Update your financial plan once the dust has settled and you have your new numbers, whether it's from buying a new house or just living in the new place. And don't let the fear of moving hold you back. As someone who has moved against her will a couple of times being married to a military member, I can truly say that there's amazing people everywhere and there are amazing opportunities everywhere. You can be happy in more than one spot.
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.