Kansas and Missouri Estate Planning

Retiring Out of State - Do Your Homework

I get it. When retirement comes, many folks feel like getting someplace warmer than Kansas or Missouri. A good many head south to Florida or Arizona to enjoy life in a retirement community and chase a little white ball around or enjoy cocktails and bridge at two o' clock with friends.

As the Bankrate report suggests, pre-retirees need to consider a lot more than sunshine versus snow days, according to a recent Investor Ideas article titled "3 Tips for Retiring Out of State."

States have different tax laws and other regulations that can significantly affect your retirement funds. Be aware of these as you plan for where you want to live and how you want to live.

If you are planning to settle in one of the other top four "best states to retire"—Colorado, Utah, North Dakota and Wyoming (in that order)—or elsewhere, here are some tips to consider from the original article:

• Take a look at the tax laws in the state where you want to retire. Two of the top five spots on Bankrate's Best List—South Dakota and Wyoming—do not have a state income tax and neither do several others: Nevada, Texas, Washington, Florida, and Alaska.
• An itemized deduction in one state may not be an itemized deduction in another. If you use the long form (1040) to file federal income taxes, hire a good CPA for guidance.
• Analyze how your new state taxes retirement income. States differ on taxing interest income from tax-free municipal bonds, and some states give tax credits, treat public and private pensions differently, or offer federal, military or blanket exclusions.
• These states are community property states: Idaho, New Mexico, Texas, California, Arizona, Wisconsin, Nevada, Louisiana, and Washington. These states divide all martially-acquired assets and debt 50/50 in the event of divorce. [Except for inheritance or gifts received by one spouse and maintained separately in his or her name.] Talk to an estate planning attorney about how this may impact you, if you are moving from a “separate property” state like Kansas or Missouri.

In fact, all of your existing estate planning documents should be reviewed by an experienced estate planning attorney in your new state because of the potential for new and different laws and requirements.

I always tell my clients that "you should have your primary care doctor, dentist, CPA, financial advisor and estate planning attorney close enough so you can hug or choke them as circumstances require."

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Investor Ideas (November 21, 2014) "3 Tips for Retiring Out of State"

State Taxation Can Sink Your Retirement / Overland Park, KS

Proper planning is all about thoughtful planning for the now, for the later, and for the “after I’m gone” stages of life. So be diligent about your everyday finances, and plan for your final estate since you never know “when.” While you are at it, also consider your retirement and end-of-life finances.

To keep things on an even keel it pays to consider taxes in structuring your late-in-life finances, and even more so to limit those taxes.

There are a lot of variables in play when it comes to budgeting for retirement, to include ever lengthening life-spans and ever increasing medical bills. No one said it would be easy.

One variable you will not want to ignore is taxes and how they will affect you.

For some advice on how to make the finances last, and how to preserve wealth both for yourself and your heirs, be sure to read a recent article in Morningstar titled “6 Ways to Curb Taxes in Retirement.”

The six ways? Roughly:

Tip 1: Diversify Your Assets by Tax Treatment

Tip 2: Consider a Roth Conversion--Even in Retirement

Tip 3: Get Savvy With RMDs

Tip 4: Mind State Taxes, Too

Tip 5: Bundle and Time Your Deductions

           Tip 6: Avoid the 'Tax Torpedo' [i.e. Social Security tax payments]

After you have read the original article, consider your own finances, or those of your elderly loved ones. Retirement is an important stage in life and one requiring careful financial planning so you do not outlive your money. Taxes are a major threat to your retirement financial security, whether you are in Overland Park or elsewhere.

How do your end-of-life finances coordinate with your plans for your estate? That is the next question, of course.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Morningstar (March 1, 2014) “6 Ways to Curb Taxes in Retirement”