Snowbirding 101: What Should the Affluent Consider Before Relocating?

Migrating to warmer climes for half the year is a long-established tradition that may have gained new devotees as a result of the pandemic. Many people lived and worked in a location away from home for months, by necessity as much as choice. That experience has some eager to become snowbirds in normal circumstances too, moving either temporarily or permanently to locales in the South or West.

Whether you are contemplating a move for better weather, lower taxes or other reasons, be sure to put your decision to the test before uprooting. Careful research that looks at relocation from all angles is needed to ensure that your move will be successful, and to avoid unpleasant surprises on the other end.

When it comes to the affluent, however, it’s not as simple as Googling what to do. Little of the discussion and advice on the topic online is targeted at high-net-worth individuals and couples, whose concerns generally go beyond those of more modest means. You will be better served by consulting a mix of professional advisers.

Here Are Points to Consider Before Snowbirding:

Taxes—While many people think of the income-tax benefits of moving to a jurisdiction with lower or no income tax, you should consider the entire tax picture. Does the new jurisdiction assess an estate or inheritance tax? Are retirement benefits, including 401(k), IRA and pension distributions subject to income tax? What is required to break residency with the jurisdiction you’re leaving? There is often a laundry list of factors the relevant taxing authority will consider.

Housing costs—How expensive are homes? How do property taxes compare? Will homeowners insurance be more expensive? Can you even obtain insurance? (Think hurricane-prone Florida or seismically active areas of California.) How will the cost and time required for upkeep of multiple residences impact your lifestyle?

Health Care—Will you have access to quality doctors and top-notch medical centers? Are there sufficient numbers of trained professionals, particularly as you age? How do long-term care costs compare, and what facilities are available?

Amenities—Will you have access to fine dining, luxury retailers and auto dealers, premier clubs (golf, tennis), theater, etc.?

Ease of travel—Will you be near an airport? Can you quickly and easily access private planes? Will you be able to easily travel to family, corporate or charitable board meetings?

Creditor protections—Which of your assets are protected from creditors in the jurisdiction under contemplation? Is there an unlimited homestead exemption, as in Florida? Are retirement accounts and life insurance protected?

Climate—Do you really know what the climate is like, and in all seasons? Will you relocate full time or part of the year?

Availability of services for part-year residents—If you won’t be living there full time, is there a network of services for part-year residents (e.g. landscaping, boat maintenance and storage, home maintenance)? A client splitting time between the Midwest and Naples, Fla., once remarked that it was difficult to find professional caretakers for his and his wife’s Midwest home when they were in Florida because there wasn’t a market for such services where they lived up north.

Consult a cross section of all your professional advisers for the most appropriate answers. Drawing your financial and tax advisers, attorney and doctor into the process will be well worth the extra effort if it ultimately makes your move go smoothly.

The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Altair Advisers LLC is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Altair Advisers cannot guarantee the accuracy of all such information presented.