Wealthy families used to ask a simple question: “Should we move?” That question is no longer simple.
For high-net-worth and ultra-high-net-worth families, state tax residency can touch where they live, where income is sourced, where a business is sold, where trusts are administered, where beneficiaries live, where entities are managed, and whether the family can prove the facts if challenged.
The financial advisor does not need to become a tax attorney. But the advisor does need to know when the issue is bigger than a tax return.
Earlier in my career, I worked in the Family Office Group at Ernst & Young. That experience shaped how I think about these issues today as the Chief Fiduciary Strategist at Wealth Advisors Trust Company. The families with the best outcomes were rarely the ones seeking a single clever tax answer. They were the ones whose advisor, CPA, attorney, and advisor-friendly trust company team were organized around the same facts before major decisions were made.
Why This Matters Now
Since 2020, state tax pressure on wealthy families has taken several forms. Some proposals are true wealth-tax proposals, aimed at accumulated net worth. California’s proposed billionaire tax, for example, would impose a one-time 5% tax on billionaires living in California on January 1, 2026, with the tax due in 2027; real estate, pensions, and retirement accounts would be excluded according to the Legislative Analyst’s Office summary.[i]
Other states have used different tools. Massachusetts applies an additional 4% surtax on taxable income above its surtax threshold.[ii] Minnesota enacted a 1% net investment income tax on individuals, estates, and trusts with net investment income exceeding $1 million. Washington imposes a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, and other investments.[iii]
The mechanics differ, but the planning signal remains the same: states are seeking more ways to tax mobile wealth. The migration data gives advisors another reason to pay attention. IRS migration data tracks interstate movement by returns, individuals, and adjusted gross income, making it useful for seeing not only where people move, but where taxable income moves.[iv] Recent IRS 2022–2023 migration data showed major net AGI outflows from several high-tax states, including approximately $11.9 billion from California, $9.9 billion from New York, $6.0 billion from Illinois, $4.0 billion from Massachusetts, $2.6 billion from New Jersey, $1.8 billion from Maryland, and $1.5 billion from Minnesota, according to the Tax Foundation’s analysis of IRS data.[v]
That data does not prove taxes caused every move. That would be too sloppy. People move for family, work, housing, lifestyle, retirement, business, and health reasons. But it does show that people and income are already moving across state lines. California’s Legislative Analyst’s Office separately noted that California continues to lose taxpayers to other states, with about 390,000 people moving into California from other states in 2023 and about 590,000 moving out, resulting in a net domestic outmigration of roughly 200,000.[vi]
Hard data on HNW and UHNW “intent to leave” is limited. But the planning pressure is real. In California, the billionaire-tax proposal has triggered visible political opposition and public warnings that the state’s most mobile taxpayers may reconsider domicile. Former Assembly Budget Chair Phil Ting put the issue bluntly: “The wealthiest Californians are also the most mobile Californians.”[vii]
The better takeaway from the better advisor is not “everyone is fleeing.” That is too simplistic. The better takeaway is that HNW and UHNW families are now asking whether their personal residence, trusts, entities, beneficiaries, liquidity events, and documentation give one state too many hooks into their balance sheet.
The Bad Answer: “Move to Florida”
The lazy answer is, “Move to Florida, Texas, Nevada, or South Dakota.” That may be part of the answer for some families. But by itself, it is not planning. It is a slogan. A client can move personally and still have trusts, real estate, business interests, family-office entities, beneficiaries, or income sources tied to the old state. Changing a driver’s license is not a plan. It is one fact among a much larger body of evidence.
The Jurisdictional Exposure Map
Advisors need a way to explain the issues with staying in their line and being the thought leader for their clients. Start with seven exposure areas.
| Exposure Area | What the Advisor Should Notice | Who Should Weigh In |
| Personal domicile | Multiple homes, recent move, unclear day count, inconsistent addresses. | CPA or tax counsel |
| Income and capital gains | Business sale, stock sale, real estate sale, carried interest, deferred compensation. | CPA and advisor |
| Business Entities | LLCs, payroll, family office, real estate, management company. | CPA and attorney |
| Trust and estate structures | Old irrevocable trusts, resident trustee, retained income, beneficiary rights. | Estate attorney, advisor-friendly trust company |
| Beneficiary location | Children or grandchildren in multiple states, mandatory distributions, and withdrawal rights | CPA and estate attorney |
| Trustee control | Advisor-friendly trust company, unclear powers, poor records, informal decision-making | Estate attorney and Advisor-Friendly Trust Company |
| Documentation | Weak calendars, inconsistent records, no minutes, mismatched addresses | CPA or tax counsel |
The purpose of this matrix is not to diagnose the answer. It is to identify the issues that warrant coordinated review through a transparent, collaborative method.
Where Trust Structures Fit
Trust planning is not the whole answer. But for HNW and UHNW families, ignoring trust structure may leave a large part of the balance sheet exposed. Old irrevocable trusts may have outdated trustee provisions, inflexible distribution language, resident fiduciaries, resident beneficiaries, or poor administrative records. An advisor-friendly trust company or directed trust structure may help clarify administration, investment authority, distribution processes, documentation, and long-term continuity.
I have seen families discover that old irrevocable trusts had become the weak link. The investment plan had been updated. The estate plan had been discussed. But the actual trust documents still named old fiduciaries, lacked modern flexibility, or no longer matched the family’s current state-residency picture. When the advisor helped surface the issue, the estate attorney and the team at the advisor-friendly trust company could review whether the trust structure still worked.
But advisors should be careful with the language. A trust company does not make a client a nonresident. It may help address fiduciary, administrative, continuity, governance, and trust-tax issues that personal residency planning alone cannot address. That distinction matters. It keeps the advisor credible.
The Advisor’s Real Job
The advisor is often the first professional to see the full balance sheet. The CPA may see the tax return. The attorney may see the documents. The trustee may see the trust administration. The client sees the operating company assets, if they exist. But the advisor often sees the investment assets, liquidity events, estate-planning implications, beneficiary concerns, and family goals in one place.
Earlier in my career, working in the Family Office Group at Ernst & Young, I saw how powerful that coordination could be. The best planning conversations did not start with one professional announcing the answer. They started with a shared fact pattern: What is owned? Where is it owned? Who controls it? Who benefits from it? What transaction is coming? What needs to be documented? That is still the lesson today. The advisor does not need to answer the legal question. The advisor needs to know when to ask the question.
The Team Approach Works When the Facts Come First
The best family planning meetings I have seen were not dramatic. They were organized. The advisor framed the balance sheet. The CPA identified tax exposure. The estate attorney reviewed the trust and entity authority. The advisor-friendly trust company partner looked at administration and decision-making. The family confirmed the records.
I have seen this work well before major business sales, where the advisor flagged the issue early and brought in the CPA and estate-planning attorney before the transaction closed. That timing mattered. After the sale, many options would have been gone.
I have also seen the opposite: families with good intentions but weak documentation. A family may say its center of life has moved, but calendars, invoices, board minutes, payroll, entity records, and professional correspondence may tell a different story. That does not mean the plan is wrong. It means the plan needs to be documented before anyone assumes the facts support it.
The Advisor’s Pre-Meeting Process
The best advisors do not call a meeting and say, “We should probably talk about taxes.” That is not the strongest path. They call the meeting and say, “Here are the areas where I think the family may have state tax residency, trust, entity, or liquidity-event exposure. I would like the CPA and estate-planning attorney to help us confirm what matters, what does not, and what needs action.”
Use this process:
| Step | Advisor Action | Goal |
| 1. Identify the trigger | Client is considering a move, sale, large gain, trust review, or entity restructuring. | Know when to raise the issue. |
| 2. Build the exposure map | Organize facts around domicile, income, entities, trusts, beneficiaries, fiduciaries, and documentation. | Walk into the meeting prepared. |
| 3. Convene specialists | Bring in CPA, estate attorney, fiduciary partner, and family office where needed. | Avoid siloed advice. |
| 4. Ask questions, not conclusions | Present the issue map, not a legal answer. | Stay in the advisor lane. |
| 5. Assign ownership | Decide who owns the tax, legal, trustee, entity, and documentation follow-up. | Turn concern into action. |
The meeting should end with ownership of next steps and timelines, not a vague agreement.
How to Talk to the Client
Here is language advisors can use: “Given the number of states changing how they tax high-income and high-net-worth families, I think we should look at your planning through a jurisdictional lens. This is a balance sheet issue. This is not only about where you live. It may also involve where income is sourced, where entities are managed, where trusts are administered, where beneficiaries live, and whether upcoming liquidity events create avoidable exposure. I am not suggesting a quick answer. I am suggesting we coordinate your CPA, estate attorney, and an admin-only corporate trustee partner so we know where the risks are before they become expensive.”
Shorter version: “This may not be just a tax-return issue. It may be a balance-sheet design issue.”
The Advisor Mistake Matrix
| Common Mistake | Why It Fails | Better Advisor Move | Client-Friendly Line |
| “Just move to Florida.” | Personal residency is only one part of the issue. | Map the full balance sheet. | “Moving may help, but we need to see what remains connected to the old state.” |
| Waiting until after a sale. | Planning options narrow after closing. | Review exposure before liquidity events. | “This is a before-the-transaction conversation.” |
| Ignoring old trusts. | Trusts may have outdated situs, trustees, or beneficiary rights. | Inventory trusts with estate counsel. | “Your personal move may not change how an old trust is taxed or administered.” |
| Assuming trust situs solves everything. | Situs does not erase domicile, source income, or beneficiary issues. | Separate trust, personal, asset, and beneficiary exposure. | “A trust jurisdiction can matter, but it is not a magic eraser.” |
| Forgetting beneficiaries. | Families often cross multiple tax states. | Map where beneficiaries live and what rights they have. | “The family is not one taxpayer.” |
| Overlooking entities. | LLCs, payroll, real estate, and family offices may keep state ties alive. | Review the entity structure with the CPA and the attorney. | “Your balance sheet may still have a state footprint.” |
| Failing to document facts. | Intentions lose to bad records. | Build the evidence file. | “The plan has to be provable.” |
| Letting advice stay siloed. | No single professional sees the whole picture alone. | Convene the team and assign ownership. | “This needs coordinated advice before anyone assumes the answer.” |
Final Takeaway
American citizens have civic obligations. They pay taxes, follow the law, and benefit from public systems. But families also have a legitimate obligation to protect their legacy, preserve capital, provide for beneficiaries, and avoid unnecessary planning mistakes.
For advisors, the issue is not whether wealthy families should contribute to society. The issue is whether unclear, unstable, or difficult-to-administer tax policy causes families to plan defensively before a law is even enacted. State tax residency is no longer just a question of personal address. For wealthy families, it is a balance-sheet design question.
The advisor’s job is not to argue tax policy. The advisor’s job is to help the family understand where the wealth is connected, what risks exist, and which professionals need to be at the table before the client moves, sells, distributes, or assumes the old structure still works.
[i] California Legislative Analyst’s Office, “New Tax on the Wealth of Billionaires,” A.G. File No. 2025-024, December 11, 2025, accessed April 28, 2026, https://lao.ca.gov/BallotAnalysis/Initiative/2025-024.
[ii] Massachusetts Department of Revenue, “Massachusetts 4% Surtax on Taxable Income,” Mass.gov, accessed April 28, 2026, https://www.mass.gov/info-details/massachusetts-4-surtax-on-taxable-income.
[iii] Washington State Department of Revenue, “Capital Gains Tax,” accessed April 28, 2026, https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax.
[iv] Internal Revenue Service, “SOI Tax Stats — Migration Data,” accessed April 28, 2026, https://www.irs.gov/statistics/soi-tax-stats-migration-data.
[v] Tax Foundation, “State Migration Trends: Taxes & State Population: IRS Data,” April 20, 2026, accessed April 28, 2026, https://taxfoundation.org/data/all/state/state-migration-trends-map-americans-moving-population-changes/.
[vi] Chas Alamo and Brian Uhler, “New IRS Data Show Pandemic Outmigration Eased in 2023,” Legislative Analyst’s Office, April 17, 2026, accessed April 28, 2026, https://lao.ca.gov/LAOEconTax/Article/Detail/854.
[vii] Yue Stella Yu, “California Democrats Are Clamoring to Tax the Rich. Why Their Proposals Could Backfire,” CalMatters, April 14, 2026, updated April 16, 2026, accessed April 28, 2026, https://calmatters.org/politics/2026/04/tax-the-rich-california-budget/.
