Making the Right Financial "Move" - residential moving guidelines - Brief Article

USA Today (Society for the Advancement of Education), March, 2001

Getting ready to move, or thinking about it? Each year, approximately one in seven Americans change residences, according to the U.S. Census Bureau. Some of the moves are merely across town, but about one-third are to another county or state. Whatever move you are planning, it will have financial consequences. The Financial Planning Association, Denver, Colo., offers guidelines to help you manage the financial impact:

Before saying yes to a new job or new position with your current employer, or before simply pulling up stakes and heading off somewhere you think you want to go, examine the financial consequences of the move. Is the cost of living higher or lower than where you live now? Home prices are especially critical, as well as transportation and food. The pay from a new job may compensate for any extra expenses, but for someone on limited retirement income, higher costs may be prohibitive. One, way to check out various expenses, besides contacting the local chamber of commerce, is go online and plug "relocation" into a search engine. You will come up with numerous sites that compare living costs around the country.

Taxes are another issue. Does the state have a higher or lower income tax? New York and California have high state income taxes, while Wyoming and Texas have none. Sales, property, and other local taxes are another factor. Some states and counties tax intangible property such as stocks, bonds, and other securities--something to consider if you have an extensive portfolio.

It is common nowadays for both spouses to work. If they move because one of them has a new job, the other will probably need to seek new employment. What are the job opportunities in the new community?

Do you sell, rent out, or keep your old home? This will depend on several factors, especially whether you'll need the money from the sale of the old home to put toward a new one. How hot or cold the respective local housing markets are will factor in. Could you buy back into the area if you decide to return?

Should you decide to keep the old home, be clear where you want to establish permanent residence, known as establishing domicile, if you move to another state. Say you relocate to a state with lower estate taxes than where you live now, but maintain your old home. At your death, the old state may be the one to tax your estate, not the new one, if you don't properly establish permanent residence in the new state. Or you could end up being taxed in both states.

Have a local attorney check out your wills, powers of attorney, living wills, and other estate planning documents to be sure they are in compliance with the laws of your new state. Revised estate planning strategies, such as trusts, may be in order if you end up owning property in more than one state.

Review your insurance policies. The new location may have less- or more-expensive car insurance. Take the opportunity to shop around for a new insurer. See if your homeowner's policy will cover your possessions in transit, and, if it does, see if its coverage and cost is better or worse than the mover's coverage.

New health insurance may be in order. You may or may not have a waiting period for preexisting conditions. If you're not fully covered immediately, either buy a short-term medical policy until your employer's coverage kicks in or extend the coverage you had with your previous employer under COBRA, a Federal law that applies to companies of 20 or more employees with a group health plan.

Don't cash out your retirement plan. Often, when people move and change jobs, they cash out their retirement plan, using the money to help move, buy a new car, or put into a home. Even if you're young and it's a small amount, that money could have compounded substantially over time.