Pulling up roots and moving to another state or city can be stressful. And almost always complicated. At the Private Bank, we can help you and your family make better decisions about the tax and financial consequences.
After a decade with a successful company in the Boston area, Juan* was considering a new position—and a significant promotion—that would require his family to move to Dallas.
When Juan’s exciting new offer came in, his kids were getting ready to enter high school. And his wife Lisa owned and operated a well-established art gallery. Professionally, the move was an opportunity Juan had worked toward his whole career. But uprooting his family was going to be a big deal.
Juan had a long relationship with his J.P. Morgan Private Banking team in Boston. After going over the pros and cons with Lisa and his girls, he arranged a meeting to weigh the financial considerations of the move.
We went over the family’s assets: the house in the Boston suburbs and a cottage on Cape Cod. And Lisa’s art gallery, which had substantial holdings and locations in both places. His banker also brought in an executive compensation specialist to discuss Juan’s new employment terms. “After Lisa and I went over the impacts of the move with our banker, we felt we could make a decision with confidence,” Juan recalled. “We were particularly impressed with the understanding he had of our entire financial picture. We decided to go for it.”
Juan and Lisa’s Boston-based Private Bank team swung into action, starting the process of moving the family’s accounts and relationship seamlessly to a team based in Dallas. And Juan’s new team worked closely with him and his new tax advisor. This included going through all the to-dos in a comprehensive change-of-domicile checklist to ensure that the Massachusetts tax authorities would be satisfied that Juan had in fact changed his primary residence to Texas.
“Our clients are often surprised to find out how much a change of primary residence can impact their tax obligations and wealth plans.”
Juan’s U.S. Private Bank team told him about some of the benefits of having Texas as his primary state of residence. They had been paying Massachusetts state income and business taxes at a relatively high rate. Establishing their domicile in Texas was likely going to lower their overall state tax bill. His bankers introduced Juan to local attorneys for further tax advice and guidance on optimizing his and his wife’s estate documents for Texas community law.
To help establish their new tax domicile as quickly as possible, the couple’s bankers and advisors suggested Juan and Lisa spend as much time in Texas as they could, as soon as they could. So the couple rented a condo near his new company’s headquarters while they looked for a new home. While they prepared for the new home purchase, the Private Bank team helped Juan and Lisa understand the best ways to finance a home to capture the significant benefits of the Texas homestead tax exemptions.
The Private Bank’s business advisory team stepped in to help Lisa reorganize the art gallery business, helping her incorporate it in Texas. Our art lending specialists even helped her leverage some of the art in her inventory to finance a new flagship location in Dallas.
Making the transitions as smooth as possible for the children was a key concern. They spent weekends and vacation time getting to know the city and visiting private schools. Juan’s parents had been reimbursing Juan and Lisa for the girls’ private school tuition. Juan’s banker suggested the grandparents pay the tuition directly to the private school, which would be a tax-free gift under U.S. tax law. The grandparents could also contribute to J.P. Morgan 529 accounts for each child (where the contributions can grow tax free) to pay for college.
With solid advice—and a solid plan in place—Juan could start focusing on his new job responsibilities. And he and Lisa could begin settling their family into a new home.
*Names and details have been changed to protect our clients’ identities.