Moving to Florida can offer many benefits, including favorable tax considerations, but establishing and maintaining Florida residency requires careful planning. One of the most common mistakes new Florida residents make is continuing to maintain significant ties to their former state without realizing the potential consequences.
Common Residency Audit Pitfalls
Although every situation is different, seemingly small decisions can become important evidence during a residency audit. Examples include:
- Continuing to use physicians primarily in another state;
- Spending extended periods at a former residence;
- Maintaining memberships that suggest another state remains the center of one’s personal life; or
- Failing to update estate planning documents and financial accounts.
Even where valuable personal belongings are located may be considered during an audit.
Additional Considerations for Business Owners
Individuals who own businesses face additional challenges. Continuing to actively manage a business from another state, maintaining executive offices outside Florida, or regularly conducting management activities elsewhere may create complications regarding residency and business taxation.
Proper documentation and planning become especially important for business owners with multistate operations.
Proactive Planning Can Help Reduce Risks
Fortunately, these issues can often be addressed through proactive planning. Regular reviews of:
- Residency documentation;
- Business operations;
- Estate planning documents; and
- Tax filings
can help ensure that all aspects of a client’s affairs consistently support Florida domicile and reduce the likelihood of costly disputes in the future.
Michael Salad is an attorney in Cooper Levenson’s Business & Tax practice group. He concentrates his practice on estate and asset protection planning, probate and trust administration, special needs planning, business transactions, mergers and acquisitions and tax matters. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in Florida, New Jersey, New York, Pennsylvania, Maryland, Connecticut, Georgia, Massachusetts, Alabama, Arizona, Virginia, Michigan, North Carolina, and the District of Columbia. Michael may be reached at (954) 889-1850 or via e-mail at msalad@cooperlevenson.com.
The content of this post should not be construed as legal advice. You should consult a lawyer concerning your particular situation and any specific legal question you may have.