Estate Planning Considerations for Snowbirds

Have you grown tired of cold winters? Are you done dealing with icy roads and shoveling snow?

Many people who feel this way decide to take up the snowbird lifestyle, leaving dreary winters in their rearview mirrors as they head toward warmer climates.

Snowbirding is a rewarding experience but can be downright terrifying when done on a whim. People who want to live a stress-free snowbird lifestyle must plan for this change.

You might have already investigated the residency requirements and know how beneficial it can be to establish residency in states with low or no state income tax. But have you considered what it means to die when living between two states?

Thinking about estate planning is one of the terrifying parts of traveling and snowbirding. Yet, you must do it to protect yourself and the inheritance of those you leave behind.

Continue reading to learn more about estate planning for snowbirds and how digital services are helping snowbirds manage their paperwork.

• New to Estate Planning? Check out our book Estate Planning 101, From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning, from Adams Media

Choose the Best State to Establish Residency

A simple rule to follow when establishing residency is to make sure it's the most advantageous state to die in. Yes, that's an unsettling thought to chew on, but it's necessary.

Did you know that as many as 32 states have no estate tax? If you thought Florida was the first choice for snowbirds just because of its sunny and warm winters, you'd be wrong.

Many snowbirds choose Florida because it's one of the states with no estate tax and no state income taxes. Another state that falls into this category is Texas.

When determining where to stake your permanent-resident claim, consider not only the property taxes you could face but these other potential estate tax implications as well.

Consider Probate Procedures

Some snowbirds own property in two states. They might own a single-family home in one state as their primary residence and a small condo in their winter home state.

When you own real estate in two different states, this property may be subject to probate in each of these states. The probate process for the state in which you own property but are a nonresident is termed ancillary probate.

Setting up a revocable trust is one good workaround to avoid this probate issue. But so is renting a property in one state and owning property in the other.

An estate planning attorney can help figure out the best way to protect your property based on your situation and legal residence. And then ensure you prepare the correct estate planning documents.

Advanced Medical Directive Considerations

An Advance Medical Directive (AMD) is a legal document that makes your end-of-life and medical wishes known.

It's also a document that allows you to name who can make medical decisions for you should you be unable to make them yourself.

Your advance directive (sometimes referred to as a health care proxy, medical power of attorney, living will, and more) should be in a secure location and easily accessed whenever needed. Your personal representative should also have an original copy as well.

Snowbirds who move between states should speak with an experienced estate planning attorney to determine what each state requires in terms of AMD documentation since estate planning laws vary from state to state.

While some states might accept an AMD from another state, others might reject it. If you have two residences in two or more states where you spend time, it's a good idea to have AMDs for each of those states.

Financial Power of Attorney

In addition to your AMD, a Power of Attorney (POA) for financial matters is an essential legal document for almost anyone, especially snowbirds. 

When you'll be residing in more than one state, it may be in your best interest to have more than one financial POA. If you own property or have financial assets in two (or more) states, it's critical.

POA documents can allow your designated agent to act on your behalf during your travels, snowbirding season, or should you become incapacitated.

While you might be able to use only one attorney to prepare your estate plan paperwork, consulting with attorneys in all states where you hold property may help determine your best course of action. 

Review Beneficiary Designations

Many people set up living trusts, or other estate plans years ahead of significant life changes like marriage, divorce, births, deaths, or adoptions.

What this means is that sometimes the beneficiary information listed in the estate plan is incorrect. If a beneficiary is no longer in your life or has been incapacitated, you must update the designation. Fail to do this, and all assets could end up being controlled by the court.

Check Your Life Insurance Coverage

Before beginning your snowbird journey, make sure you check your life insurance coverage. No one wants to think of something tragic occurring. Still, accidents happen, and you want to prepare for them just in case.

Does your life insurance policy still meet your family's financial needs? You might need to adjust coverage, add, or even cancel a policy.

A popular option for snowbirds, and really anyone who's looking to the future, is to consider long-term care (LTC) insurance. This insurance covers the cost of long-term care in the event that you need memory care, skilled nursing care, or other assisted living services.

One of the benefits of long-term care insurance is that it doesn't eat up your assets. But it can be expensive so do your homework before securing a plan.

Get Your Documents Organized

A lot of preparation goes into becoming a snowbird, and part of this planning is organizing all your important documents.

Having your paperwork all in one place makes it easier for family members, executors, and trustees to have the information they need.

Years ago, you could easily find most of this paperwork in a file within our homes. Today, there's less of a paper trail because we do so much online.

So how do you organize all your documents when they're spread out across multiple sites?

There are a couple of solutions. The first solution is to create a spreadsheet or document of all your accounts and their locations. This document should include usernames and passwords, so the accounts are accessible.

Before heading south for the winter or even on an extended vacation, make sure the spreadsheet is updated. Print a hard copy of the spreadsheet and tell a trusted person where to find it if the digital copy isn't available.

Digital Storage Solutions

Another way to get organized is to use a digital service like Everplans, Gentreo, or Cake. These services are described as a digital archive or digital vault for all your essential paperwork.

They offer secure online storage for your essential estate planning documents (and more) shareable with trusted family, friends, and advisors.

Examples of documents stored on digital platforms like Everplans include:

• Health insurance information
• Doctors numbers
• Medical records
• Mortgage documents
• Bank account statements
• Financial statements
• Wills and trusts
• Powers of attorney and advanced healthcare directives
• Real estate deeds and other estate documents
• Vehicle information
• Spousal information
• Pet records

There's no end to the amount and type of documents you can store securely on these platforms. Digital storage services don't work for everyone, though.

Some people are nervous about having such sensitive information online and vulnerable to hackers. You also might not be in an area where you can easily get online.

A happy medium for most snowbirds is using a combination of digital and old-fashioned record keeping and a safe deposit box or home safe. Whatever method you choose, make sure all your ducks are in a row before you begin your snowbird adventure.

Final Thoughts on Estate Planning Implications for Snowbirds

Living in two states makes estate planning trickier, but it shouldn't derail your dream of living the snowbird lifestyle.

Work with an estate planning attorney to help you navigate estate laws when you will be (or already are!) living the two (or more) state lifestyle.

Then, you can enjoy warm winters and stress-free living knowing you and your heirs are protected.

Next: How Snowbirds and Travelers Get Their Mail

Please share!