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/.
The POV: When financial advisors and wealth managers have their phones ringing off the wall with clients calling. Economic markets are volatile and moving in concerning directions outside of risk comfort zones. Portfolios are down, inflation is up, news headlines are alarming, and the questions being asked are harder than usual with answers uncertain. Nearly every financial advisor and wealth manager in the country is navigating the same environment right now.
But what separates the advisors who use this opportunity to create deeper, more loyal client relationships, from those who those who simply weather the storm, is the willingness to move beyond portfolio commentary and into proactive, value-driven future planning that most of your competitors do not offer.
Periods of global disruption and market volatility are inflection points, moments when your clients are most open to big-picture planning conversations, when temporary dislocations in asset valuations create genuine estate planning opportunities, and when the structure around a client's wealth proves its worth or reveals its gaps. The advisors who act decisively in these windows, rather than waiting for clarity, position their clients for enduring advantages that compound over decades.
When geopolitical or economic shocks arrive, your clients face two categories of risk.
The first is portfolio risk, visible, quantifiable, and top of mind for everyone. Your clients can see it in their account statements. They can feel it. They want to talk about it.
The second is structural risk, and it is far more dangerous in the long run because it is almost entirely invisible until a triggering black swan event forces it into the open. Structural risk occurs when a client's business sells under duress and no asset protection is in place. Or, when a client dies unexpectedly, and the trust document language does not align with how you serve the family, or it automatically removes you from the relationship. It is what happens when a legal judgment arrives at the worst possible moment against assets that were never properly insulated.
Periods of global instability dramatically increase the frequency of these events and the clients who have well-designed trust structures already in place navigate them from a completely different position than those who do not. Your job, right now, is to know which of your clients are in which camp, and to act on that knowledge.
Asset protection structures need time to season before they reach their full effectiveness. Courts look backward at transfers made in anticipation of known threats. Once a crisis is visible in the headlines, your client's protective planning window has already narrowed. The clients best positioned in any period of uncertainty are the ones whose structures were built before the disruption arrived.
Most advisors underutilize temporarily depressed asset valuations during periods of market disruption, yet they are among the most powerful inputs in the estate-planning toolkit. The lower your clients' assets are valued today, the more efficiently those assets can be moved across generations and into protective structures. If you wait for calm and recovery before having these conversations, the opportunity may be gone.
If you move now, the advantages compound over decades. Here is where to focus:
When your clients' asset prices are depressed, their lifetime exemption dollars accomplish significantly more. A Grantor Retained Annuity Trust (GRAT) funded with a business interest or equity portfolio that has declined in value can transfer far greater wealth to the next generation if those assets recover, because appreciation above the hurdle rate passes gift-tax free. The lower the starting valuation, the larger the potential transfer.
A Spousal Lifetime Access Trust (SLAT) established now moves assets out of a taxable estate at a discount, while still allowing your client's spouse to benefit during their lifetime. If you have clients who have been circling these conversations but waiting for the right moment, this is it..
At Wealth Advisors Trust Company, we work directly with you and your clients' estate-planning attorneys to administer these structures efficiently once they are established, so the planning opportunity you create is not lost to administrative delays.
Periods of global instability tend to precede significant fiscal and tax policy changes. Governments facing economic pressure look for revenue. Lifetime exemption amounts, estate tax thresholds, and capital gains treatment are all legislative targets, and history suggests those changes rarely arrive with advance notice.
Structures your clients build now provide insulation in two ways: through gifts and transfers completed before a policy change, which typically grandfather existing treatment, and properly established irrevocable trusts are generally not subject to retroactive modification. Building flexibility into structures today, including trust protector provisions and decanting authority, creates optionality for your clients that will matter when the legislative environment shifts. This is a planning conversation you can have with virtually every client who has a significant estate, and almost none of your competitors are having it proactively.
Annual exclusion gifting is simple, but it becomes significantly more powerful when the assets being gifted are temporarily depressed in value. A gift of business interests, real estate fractional interests, or closely held stock at a low valuation transfers more economic value than the same gift at peak prices, using the same exemption. For your clients with significant estates, a coordinated gifting program initiated during a market downturn can meaningfully transfer more wealth across generations at no additional gift tax cost than the same program started a year from now, when values have recovered.
For clients considering charitable giving, a volatile environment creates specific structural opportunities. A Charitable Remainder Trust (CRT) funded with highly appreciated or volatile assets removes those assets from the taxable estate, provides an income stream to your client, and delivers a partial charitable deduction.
A Charitable Lead Annuity Trust (CLAT) can be particularly effective in a lower interest-rate environment, where the IRS hurdle rate is reduced and more wealth passes to family beneficiaries tax-efficiently.
If you have clients whose philanthropic intentions have been in the background while you focused on investment management, now is an ideal time to bring those conversations to the forefront. At WATC, we administer charitable trusts alongside traditional family trusts, so you can offer an integrated solution that covers both goals within a single coordinated structure.
Beyond the strategic opportunities that volatility creates, your clients need to know that the structures around their wealth will hold up when things get hard. Here is what a well-designed trust provides that no portfolio can:
Assets held in a properly drafted irrevocable trust are generally not reachable by future creditors of the grantor. South Dakota, where Wealth Advisors Trust Company is chartered, offers what many legal experts consider the strongest Domestic Asset Protection Trust (DAPT) statute in the country.
A settlor can be a discretionary beneficiary of their own irrevocable trust while protecting assets from future creditors after a two-year seasoning period. In an environment where business stress, litigation risk, and financial pressure are all elevated, that protection is not theoretical. It is the difference between a client's wealth surviving a crisis intact or not.
If your clients have individual trustees, whether a family member, sibling, or close friend, those trustees are navigating the same stressful environment your clients are. A crisis is exactly when individual trustee arrangements are most likely to break down: through health issues, family conflict, unavailability, or simply the weight of the responsibility.
A professional corporate trustee at WATC does not have those vulnerabilities. Trust administration continues with consistency and precision regardless of what is happening externally. For clients who have never considered what happens to their trust if their individual trustee cannot perform, this conversation is worth having today.
South Dakota's abolition of the Rule Against Perpetuities means that a trust established here can last in perpetuity. For your clients, this means that the structure you help them build today is not just a planning tool for this moment in time, but a foundation that will last across generations. It will outlast every disruption, every market cycle, and every geopolitical event that comes after this one.
When you present this to clients who are anxious about the future, the perpetual trust is not just a legal structure. It is a statement of long-term confidence that most advisors never think to make.
Volatility is an opportunity for planning and relationship-building. Your clients are anxious and looking for a stability anchor. The advisors who serve as comprehensive planning partners will deepen client relationships in ways that market performance alone never could.
Here is where to start:
You do not need to be a trust expert to start these conversations. You need to be the advisor who raises the question before the moment of urgency arrives. We will be your resource for everything that comes next. That is the entire point of the WATC model: supporting your expertise, protecting your client relationships, and staying entirely out of your lane on investment management.
A brief but important caveat: asset protection trusts need time to reach their full effectiveness. Transfers made with the intent to defraud known creditors are not protected, and courts scrutinize transfers when specific threats are already visible. South Dakota's DAPT statute has a two-year seasoning period, meaning the protective clock starts only when the transfer is made.
This is not a reason to wait. It is the reason to act now rather than later. The clients who will have the most options in the next disruption are the ones whose structures are already seasoned before it arrives. Every day you delay is a day later that the clock starts.
In every disruption lies a moment for reinvention. The advisors who will be remembered by their clients for this period are not the ones who sent the best portfolio update email. They are the ones who called proactively, identified the structural gaps, coordinated the planning team, and helped their clients capture the opportunities that most people missed because they were too focused on the noise.
At Wealth Advisors Trust Company, we have grown from zero to $4.4 billion in assets under administration since 2009 by building an institution that makes exactly that kind of advisor look even better. Kind, responsive, and collaborative trust administration. No investment management. No competition with you for your clients' assets. Just the best possible trust partner for advisors who expect more. Let's talk about what that looks like for your book.
