More and more Connecticut residents are rethinking their retirement and whether to remain in the Nutmeg state, due mainly to the prohibitive estate taxes and increased probate fees. Residents are fleeing the state for less expensive places to retire, and Florida, with its favorable tax policies and Homestead Laws, is becoming more attractive than ever.
According to one recent survey, Connecticut was voted one of the most expensive states to die. Connecticut imposes a tax on all individual estates totaling over $2 million. This is in addition to, and significantly out of line with, the Federal Exemption of $5,450,000 (effective 2016, per spouse). More recently, the state has completely cut the Probate Administration budget, which has resulted in the removal of the cap on Probate Fees.
In contrast, Florida has no Estate Tax and its Homestead Laws can protect you against creditors and cap your real estate tax for your Florida residence. Although, we typically hear; I just have to live there six months and a day; the procedure to establish Florida residency, must be followed precisely and completed within certain time frames. Also, being aware of the constant changes in The Florida Homestead Act is critical.
While moving to Florida may not completely free you from your prior states income tax, it would address future Estate Tax issues. The long arm of the state you are moving from, becomes more of a hassle to break free of, than the establishment of Florida residency.
Nowadays, it is not uncommon to be dealing with second marriages and blended families. This is another significant complication that needs to be addressed in planning for Florida Homestead. It is important to note, The Homestead Act grants the surviving spouse specific rights and takes into consideration whether there is a Prenuptial Agreement and whether the Florida Homestead was waived.
In the end, consulting with your attorney is essential in order for your future plans to be personalized and your objectives to be met.