Si Matthies – Wealth Manager Wells Fargo Bank
When exploring a move to Jackson Hole there is much to consider: the beauty of Grand Teton National Park, the proximity of Jackson to some of the best fly fishing in world, endless hiking and biking trails, the cultural opportunities found in our galleries, concert halls and museums and the abundant wildlife throughout Teton County.
Another aspect that future residents should carefully consider is the tax climate found in Wyoming. Wyoming is a very attractive state in which to establish residence because of its lack of income tax (state income tax is constitutionally prohibited), its attractive trust laws (Wyoming allows 1000 year trusts) and no estate or gift taxes at the state level.
These are often convincing factors and the tax savings can mitigate the cost of a move and the establishment of domicile in Jackson Hole in short order. Done right, these factors also allow new residents to enjoy their lives here in Jackson while knowing that they’ll be passing along more of their estate to loved ones generations down the line.
States, in an effort to raise receipts; have become much more aggressive taxing estates, inheritances and gifts. According to a recent article in the Wall Street Journal, 19 states, representing 30%+ of the U.S. population, tax estates of those who die or inheritances passed from an estate to an individual. Most of those states have an exemption amount (that which can pass untaxed) much lower than the current federal exemption of $5.25MM. Only two states (Delaware and Hawaii) mirrors the federal exemption.
So, Wyoming has it all…beautiful scenery, recreational opportunities, a thriving cultural scene and a very advantageous tax regimen. All of these are good reasons to consider Wyoming your new home.
But what about leaving your former domicile? States are paying much greater attention to how you depart. If done incorrectly, you may find yourself owing taxes in a state that you thought that you had left. The courts are littered with cases of states chasing their former residents for taxes owed.
Here are some tips on how to depart:
– Purchase a one-way ticket to Jackson, Wyoming. Keep a copy of all travel receipts and records including additional luggage receipts for at least 2 years.
– Ship all furniture, household items, personal effects, furnishings and any tangible or intangible owned property to Wyoming. That includes cleaning and vacating all storage facilities.
– Use a standard form letter to close all financial accounts including checking, savings, brokerage, money management, credit cards, ATM cards, safe deposit boxes, revolving credit arrangements and any other financial relationships that may represent a relationship within the former state.
– If you own property in the former state and are claiming homestead status, re-characterize to standard property tax rates.
– Surrender your driver’s license.
– Send letters of resignation to all fraternal organizations, religious organizations, non-profit boards of directors, athletic clubs and country clubs.
– Send a form letter to doctors, dentist, optometrist, psychologist and psychiatrist terminating your professional relationship and advising that you are leaving the state and where you’ll be residing.
– Send similar notification to lawyers, accountants, business managers, CPAs and service providers such as domestic help, grounds keepers and schools.
– Complete a change of address form at the post office.
– Terminate your telephone listing.
– Dispose of any cemetery plot or crypt.
– Finally, document all your movement in and out of state. Phone records, credit card records and airplane tickets should be retained for a minimum of three years. These records can be very help at heading off a court date with the state tax commissioner.
Some of this may seem extreme, but many states have become very aggressive chasing former residents, claiming that, based on remaining connections to the state, they have not changed their domicile.