© Bank of America Corporation. All rights reserved.
There has been a steady drumbeat of new residents pouring into the Sunshine State for decades. Over the years Florida has seduced residents from other States due to its warm weather, relatively low cost of living, lack of state income taxes, lack of estate or inheritance taxes and some of the best debtor friendly laws in the country.
In fact, Merrill advisors have added close to 10,000 new client relationships in Florida over the last four years. Much of the growth is taking place in the southeast part of the state – places like, Miami, Fort Lauderdale and Palm Beach – as well as other locations, such as Tampa and Naples. Merrill currently has 20 Private Wealth Management teams in Florida who serve the more sophisticated needs of Ultra High Net Worth clients. According to Don Plaus, Managing Director and Head of Merrill’s Private Wealth Management, International and Institutional businesses, “We plan to double our Private Wealth Management presence in Florida over the next few years to better meet the needs of our clients”.
Recently, the number of people coming into Florida has swelled to an all-time high due in large part to the 2017 Tax Cut and Jobs Acts and the ongoing health pandemic. “And in response, Merrill Private Wealth Management has ramped up its Florida presence, tools and platform to respond to our wealthy client’s needs,” explains Plaus.
Under the 2017 Tax Act, taxpayers can no longer fully deduct State income tax (or property taxes for that matter) … but are instead limited to deducting State and local taxes up to $10,000 a year on their Federal income tax return. “For wealthy taxpayers this has translated into much larger Federal income tax bills,” explains Michael Duffy, a Managing Director in Merrill’s Strategic Wealth Advisory Group.
California, for example, has the highest marginal income tax bracket at 13.3% with a proposed bill (Assembly Bill 71) that could raise the highest marginal income tax rate to 16.8%. New York introduced Senate Bill S4482 in January 2021 that would require New York resident billionaires to pay capital tax on their unrealized profits each year. “High State taxes … and the threat of even higher State taxes, are only serving to fuel the inexorable migration to Florida,” says Duffy.
The pandemic has also helped by broadly socializing the concept of working remotely from home. “I am seeing a lot of people decide after they have worked successfully from home for a good part of a year to pull up stakes and move to Florida,” says Josh Moody, Managing Director for Merrill Private Wealth Management’s Florida region. Moody is proud that in recognition of this population shift, Merrill developed educational materials and tools for its new Florida clients.
Top 10 Things to do When Moving to Florida
“An important aspect of changing your domicile to Florida is severing your domicile in your current State,” warns Duffy. Each state has its own unique rules as to when you fall under their taxing authority. Just because you convince Florida that you are its resident, does not mean that your old State will recognize you are no longer subject to its income taxes. “It is important to work with your legal advisors to make sure that your move to Florida will be recognized by your old State” notes Duffy.