Making the right financial move

Getting ready to move? Or thinking about it? Roughly one in seven Americans

moves every year, according to the U.S. Census Bureau. Some of the moves

are merely across town, but about one in three are to another county or

state. Whatever move you're planning, it will have financial consequences.

Here's a checklist to help you manage the financial impact.

Before saying yes to a new job or new position with Uncle Sam, 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 where you moving to 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 cost of living,

but if you're a retiree living on your Civil Service annuity, higher costs

may be prohibitive. One way to check out local expenses, besides contacting

the local chamber of commerce, is go online and plug "relocation" into a

search engine. You'll come up with numerous sites that compare living costs

around the country.

Taxes are another issue. Does the state you're moving to have a higher

or lower income tax? New York and California have high state income taxes,

while Wyoming and Texas have no state income tax. Income, 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. Gift and estate taxes raise consideration

if you plan to gift a lot or have a large taxable estate.

It's common for both spouses to work. If you move because one of you

has a new job, the other spouse 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 decision will depend

on several factors, not the least of which is 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 also is a factor. Could you buy back

into the area if you decide to return?

Should you decide to keep the old homestead, be clear where you want

to establish permanent residence — known as establishing domicile — if you

move to another state. Say you move 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. Registering to vote, getting a driver's license and

registering your vehicles, paying taxes and spending most of your time in

the new state should help clarify the issue. Review the residency and "substantial

presence" laws with an attorney.

Also have a local attorney check out your wills, powers of attorney,

living wills and other estate planning documents to be sure they comply

with the laws of your new state. New 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 is necessary if you're moving to the private sector.

You may or may not have a waiting period for pre-existing conditions. If

you're not fully covered immediately under the new employer's policy, don't

risk "going naked." Either buy a short-term medical policy until your employer's

coverage kicks in or extend your government health insurance coverage.

Finally, don't cash out your Thrift Savings Plan. So 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.

Many thanks to the Financial Planning Association and Dennis Filangeri,

a certified financial planner based in Metairie, La., for many of the ideas

in this column.

—Zall, Bureaucratus columnist and a retired federal employee, is a freelance

writer based in Silver Spring, Md. He specializes in taxes, investing, business

and government workplace issues. He is a certified internal auditor and

a registered investment adviser. He can be reached at miltzall@starpower.net.