Florida residents may be aware that part of a successful estate plan is ensuring that adequate funds are available to provide for the rest of the grantor's life. Successfully planning a person's retirement requires assessing the situation and making changes as necessary. Some areas, such as Florida, may be more affordable for individuals to retire due to lack of income tax or other factors.
Six other states besides Florida have no income tax. Furthermore, two other states only impose tax on income from investments. Although a retiree may have less income, he or she may decide to be "semi-retired" by leaving a high-stress job for a more enjoyable part-time position. Income tax is also implicated when a person has a significant amount of investment income on which he or she plans to draw money from. For this reason, it is also important to determine if a state offers exemptions for retirement-related income. Pennsylvania and Mississippi do not impose state income taxes on retirement-related income, including Social Security, pensions, 401(k) plan distributions or IRA distributions. New York and Massachusetts exempt government and military pensions from tax.
Another aspect to consider when determining a retirement destination is the amount of property taxes. If a person buys a property where he or she is going to retire, property taxes will have a significant impact on his or her budget. Many states have property tax exemptions or tax breaks that are intended to benefit retirees. For example, some states provide rebates of up to 90 percent for individuals over age 62. A final consideration is the amount of state inheritance or estate taxes. Passing an inheritance to a person and then having that person to be required to pay large taxes may undermine the grantor's intent.
Florida estate planning attorneys may be able to help individuals with their estate plans. They may draft documents or recommend ways to save on estate taxes.
Source: Daily Finance, "5 Tax Breaks the Best States Offer Retirees", Dan Caplinger, September 07, 2013