smooth moving ebook - relocating...corporate relocation considerations consider this common scenario...

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Smooth Moving


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Index

Corporate Relocation . . . . . . . . . . . . . . . . . . . 3 Where Do I Move? . . . . . . . . . . . . . . . . . . . . . 10 Smooth Move . . . . . . . . . . . . . . . . . . . . . . . . . 15 How To Pack . . . . . . . . . . . . . . . . . . . . . . . . . 17

When Families Move . . . . . . . . . . . . . . . . . . . 20


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Corporate Relocation Considerations

Consider this common scenario faced by many employees: Your supervisor calls you into her office on a Friday afternoon and asks you to transfer to the Sydney office. She says the new job includes a $20,000 increase in salary, and loads of potential "in the future." She gives you the weekend to think about it. What do you say? No doubt, a million questions start popping into your head. You've heard Sydney is expensive to live in. Is $20,000 enough? How much are the houses? What will your property taxes be? What about income taxes? What about your wife's job? Will the kids like it there? Will you like the new job? What is the impact on your career if you refuse the job transfer? Do I have to get my own furniture removalist?

According to psychologists relocation is among the most stressful events that can happen to a person, or a family. Changing jobs, which often occurs when relocating, is also high on the stress index. For many people the decision to relocate involves a complex set of variables of a financial, personal and emotional nature. These factors contribute to the stress in varying degrees, depending upon the individuals involved. The questions above can be broken down into two broad categories: objective and subjective. The emotional and personal aspects of relocation are subjective and thus difficult to model. Fortunately this is not true of the financial ramifications, which are more objective.


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When deciding on compensation packages for transferred employees, employers often do not consider that each employee is an individual, with unique financial considerations. No two families are alike and a relocation and move analysis must reflect differences in income tax brackets, housing size, property taxes, spousal income, dependents, etc. Using generic cost of living indices does not produce an accurate calculation of the financial impact of relocating. Using only a customized analysis will produce true apples to apples comparison. The battle cry of the relocating employee is "AT LEAST KEEP ME WHOLE." In other words, the employee should not have to relocate, absorb the emotional stress, and lose money as well. The after tax cash flow should be at least zero.

An accurate, individualized, analysis has other benefits for the employer. These are:

If the employee is presently living in a high cost of living area, and the employee is moving out of this area to a lower cost of living area the analysis will most likely show a positive cash flow, which will encourage the employee to relocate.

Employers in low cost areas will find the analysis useful in encouraging employees to transfer into the area from higher cost of living areas, since the analysis will probably show a positive cash flow. Lower salaries can be justified, and demonstrated to the employee, thus saving expenses.

Employers in high cost of living areas can use the analysis for employees moving into the area, from lower cost areas,


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when cost of living concerns are negatively impacting the relocation decision, and there is a resistance to relocation. An analysis may convince the reluctant employee that the after tax cash flow isn't as bad as they thought. Often, reluctant employees must relocate to high cost areas for career advancement purposes, but want just compensation, calculated in gross salary dollars. A confidential analysis will show an employer how much the employee should be equitably paid, to compensate for cost of living differences.

Employers can use the analysis to make sure employees are comparing apples to apples in their relocation decision. Many employees attempt to upgrade their standard of living, usually through unfair housing and community comparisons, at the employer's expense.

Most employees and employers perform a very superficial analysis of the financial impact of moving interstate. This is understandable since it is very complicated from a tax and financial planning point of view. The typical analysis involves a comparison of housing in the new area with the increased salary offer, if any. Or the salary is set based upon a comparison to other employees in similar positions.

The effect upon a family's cash flow in the first year after the move is much more complex than this simple analysis. As a result costly errors can be made which affect not only the family's financial health but also their happiness as well. An employee who feels unfairly treated is not as productive, and may seek other employment. If the employee is worth relocating he/she is worth fair compensation. After all, if


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suitable talent were available locally the relocation would be unnecessary. Relocation mistakes result in further relocation and additional stress for both the family and for employers.

Performing a proper analysis before a relocation offer is accepted reduces stress by decreasing uncertainty. This allows the employee to evaluate the relocation

offer more accurately, and provides benefits to the employer by increasing employee happiness and retention.

Before describing the financial changes caused by relocation in more depth it should be noted that the analysis should be performed, not just for the relocating employee, but for the entire family. Often relocation can cause major financial changes for spouses, companions, children, dependent parents, and others. Also, all changes should include the federal, state and local tax impact, where appropriate, at the individual's projected marginal rates of tax.

The analysis should compare the old salary with the change in family salary, wages, and business income. It should not include changes that would have occurred anyway had the family not relocated, since this would obscure the real cost, and would be unfair to the employer. The change should be net of federal, state, and local (city) income taxes, as well as social security taxes. A common problem experienced by many families, sometimes called the "trailing spouse" problem, occurs when the spouse of a relocated employee experiences great difficulty finding employment in the new area. The analysis should be able to analyze the projected decrease in the spouse's income for the first year after the


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move.

Another area often neglected by relocating individuals is the change in wealth caused by changes in automobile expenses. This can be caused by changes in commuting distances, automobile insurance rates, personal mileage (for example to return home to see friends and relatives, or to access qualified medical care), tolls and parking, use of a company car, or an increase or decrease in amounts paid by employers for business use of your personal car. Some of these changes have tax effects and some do not.

Most people underestimate how expensive it is to operate an automobile, probably because the major portion of the expense is depreciation (a non cash item), and because the expenses are paid gradually.

Changes in job benefits are often a factor if the employee is changing employers, and occasionally when transferring within the firm. Items to consider here include changes in medical insurance, life insurance, plans, and other perquisites such as day care.

Changes in state and local income taxes should be included, net of federal tax effects. The family's income should be recalculated using the tax laws of the new state, and city (if there are state income taxes). Consideration must be given for employees choosing to live in one state and work in another.

Changes in housing costs are, of course, a major item. It is important to make valid, meaningful, comparisons when


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comparing housing costs between areas. For example, comparisons should be made which compare the same size houses (square meterage). Also included should be the real estate taxes, and rent, if the individual is not buying. Of course, the federal income tax impact of these changes should be included. Another factor to be considered is the change in interest rates caused by exchanging the old mortgage for a new one.

If the employee is buying a cheaper house in the new area he/she may incur federal and state capital gains taxes. This tax should not be included in the analysis because it occurs only once, and should not be part of the calculation of ongoing salary.

Of course, the employee should be reimbursed for this tax, since the relocation caused the imposition of the tax. Likewise, if the relocation causes the family to have to sell investment real estate, a partnership, or stock in a closely held business then there will be capital gains or losses incurred because of the realization of gains or losses on the sale of these assets. Distance or increased job responsibilities may require that these investments be sold. If the family wishes to compare owning vs. renting, or renting vs. owning, the analysis should be able to do this, although it may not be a fair comparison for negotiation purposes.

Finally, the analysis should not include the cost of moving household belongings, travel expenses including meals and lodging for the family, temporary living expenses in the new


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area, pre move house hunting trips, real estate agent's fees, legal fees to buy and sell houses, points to payoff an old mortgage or secure a new mortgage, and redecorating expenses. These expenses are one time expenses which will not repeat in future years, and therefore should not be included when calculating salary. Of course, the employee should be reimbursed for these expenses, but if the purpose of the analysis is to show gross salary equivalents then moving expenses should be excluded, since they are not recurring.

Most employers will pay some or all of these expenses, but it is wise to be specific about what will be reimbursed. The reimbursement of deductible expenses is not taxable, while the reimbursement of non deductible expenses is completely taxable. Therefore the employee must be reimbursed for federal, state, local, and social security tax impact on the portion of the reimbursement which is non deductible.

This is called a 'tax gross up payment. Since the tax gross up payment is also taxable the calculation becomes a little complex. Many employers do not calculate this amount correctly. They usually do not reimburse for the state, local and social security tax impact and they assume all taxpayers are in the same tax bracket.


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Where Do I Move?

For some the question of “Where do I move?” may seem a little bizarre, for others it may incur fear, stress, and restlessness of the unknown. It is assumed that every five years 17% of the population will move house. To some of those the likelihood of moving to a new city or perhaps country may be a bigger reality than expected. Your spouse may be offered that once in a life time career development opportunity or your elderly parents may need the comfort of family closer to home. It doesn’t matter what your reason, the shear reality for some of us is we will make a move that is potentially out of our comfort zone. We live our life in an environment we have either grown up in or become accustomed to, having friends, family, shops & schools to name a few of the creature comforts. Regardless of the reasoning we do not realise what we have until we decide to relocate. More importantly what do we consider when we are looking for a new home or area in which to live? If you do not have access to some good local knowledge at your new destination here are some ideas to help you make a more informed decision, certainly your criteria could be unlimited, so let’s highlight some key considerations for now rather than after moving.


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A common question I enjoy the banter of is “Which side of town do I live, Northside, Southside etc?” The answer is obvious if you live on the Southside guess what the answer will be……. Here are some things to consider: Future urban development - can you expect a new industrial or commercial park development as your next door neighbour, or is the local council, county or municipality proactive in future growth of the area, and how they intend to cater for an increased population Property Values growth or decline obviously in a fast growing area may be positioned favourably to local services, public transport, or ocean views for example. A decline may represent a saturation of new homes & not necessarily because a new highway is being built right through the middle. A Population increase or if a decrease may be indicative of an area in decline of employment opportunities which may experience a reduction in available services in the future. Community services be it health clinics, shopping centres, banks are normally a good sign of stable future development, as some of these service providers will not have a presence in an area if it is not viable.


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Crime rate this can be sourced from either the government statistics reporting agency or consider contacting the local Police station. Owner occupier versus investment owned homes. Whilst this is not always a benchmark of comparing those in the community, as people can be nice whether they rent or own a property. It is assumed that if the investment ownership exceeds the owner occupier then that may have some cause for further investigation. Also consider apartment versus housing ratio as one may impact on the others future capital growth. If you contact either the Real Estate Institute or governing body in the respective state they generally have this information readily available or can be asked for. Schools in areas can be summarised in benefits if you visit the government education department web site from there look at the schools population their academic achievements. At this point you can drill down further on what each school has to offer by visiting their web site sourced from the education department listing. You may be able to condense your search to a region or post code. P&C Parent & Citizens or Parent & Friends meetings at local schools is a good gauge for those wanting to place their child into a specific school, one can get a feel for how compassionate or proactive a school is by the support they receive from members of the community and the teaching staff.


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Playgroups or early childhood learning centres is a great way to establish new friends in a community if you have a young family, & in both cases there is normally an association or governing body that can suggest a centre or gathering place in your local area. Sporting & recreation clubs or Associations are a great way to meet new people; you may even find or easily establish an expatriates club for people from your region or get involved in the local Chamber of Commerce or Rotary Club. Starting a new business, look at what is being offered in the area, do not be afraid of competitors you may be able to do it better & still win them over. Like any new business do your homework to determine if the market can support your new idea, demographic surveys are available from local municipalities or government reporting agencies. Parks & gardens whilst not essential will provide an outlet or escape if your new surroundings appear daunting, not to mention if you have children they can be a form of energy release to make your new home more relaxed & comfortable. Some people may be attracted to a pristine environment although cannot afford the lifestyle or may be limited by employment opportunities in their speciality. There are plenty


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of good internet resources when investigating Real Estate values be it for lease or to buy, along with online employment advertising. If you have a selected skill set yet the new location is saturated with people who perform the same role, consider your available options. Before deciding on your new chosen location what is the traffic like or activity at selected times of the day, particularly if you are opposed to sitting in a traffic jam or are accustomed to regular reliable public transport. If getting from home to your place of work is a problem be mindful of how that will affect your attitude or work life balance. You may find it distressing travelling for long periods of time or it may give you the opportunity to unwind; either way if you are spending a lot of time travelling, consider the implications. There may be no benefit of living in that pristine environment if your work commitments do not allow you time to enjoy it. The most important thing when moving to a new location is to have fun & enjoy it. You will get exactly what you want if you have the right attitude & a clear expectation of your desires, you have a greater chance of succeeding. What ever you decide, make your new house home sooner naturally & easily.


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Smooth Move

It doesn't matter if you have a fully funded corporate relocation package, or you are planning a move yourself there is always plenty to consider. It is important to locate someone who has good local knowledge & can provide you with advice on basic essential services, some of which we take for granted normally after the move. Removalists alone are a dime a dozen, & there are plenty of horror stories about people who have planned their move interstate and hire a furniture removalist not have a truck turn up on the day of settlement. The best advice is to ensure that you follow up the Removalists a week out from the pick up date and again the day before, particularly if you are moving long distances. Big doesn't mean better, so ask the Removalists firm for testimonials or better still speak with friends, family or co-workers to recommend a firm with integrity & quality of service. Ensure your move is well planned & the kids are kept advised of their new surroundings, and that you are there to support them. As adults you may need to consider the employment opportunities or the industries enjoying success if starting a business. It is just as important to have the right attitude about the move, because as much as 30% of people move back after relocating, because they didn't do their research effectively & their expectations were beyond the reality.


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There is old story which I will paraphrase. There was once a couple who were driving in search of a new home, where they met an old man on the outskirts of the town. They stopped by the side of the road to ask the man if this was the sort of town they could raise a family, as the one they came from was laden with crime & poverty which they couldn't wait to leave. The old gent replied in that case this town isn't for you, & they drove off. Later another couple driving into town, stopped to ask the man what type of town lay ahead, as they were looking for new start in life, to meet new people & to settle down in a small community. The old man replied "You found it". The morale of the story being with the right attitude you will find what you are looking for. If you are considering moving check out what your new destination has to offer, certainly the climate, employment, the environment & the way of life can makes it incredibly inviting for those looking for a new start in life.


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How To Pack

To make the packing process simpler invest the little money to purchase good solid packing boxes. On average and from brand new expect to pay $4 per box or for a good second hand box you will pay about $2.50 each. Don’t be too stingy here, sure you can go & visit your local fruit & vege shop to score the boxes for free. You can contend with an array of different size boxes, some with lids some without, not to mention when you or the removalist packs the truck up, you can start praying and hope it makes it to the new destination in one piece. My experience is the packing boxes are intended for just that “packing”, and are much more user friendly. If your removalist does not provide them then approach your local storage sheds, they have them in various sizes to suit, and most will buy them back off you when you’re finished. When it comes to starting the arduous task it is pretty safe to say that three areas that consume the most space & time are the kitchen, linen cupboard and the garage or tool shed. Generally speaking these three junk collection areas attract mysterious hiding places that unearth items the moment you start packing. Therefore unless it is family heirlooms decide then & there do you keep it or pack it, on the understanding it will find a similar location at the new home.


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Ideally if you are organised which I suggest you are unless you like paying removalists or for truck hire unnecessarily, start the packing process a week or two out prior to despatch day. If the thought of packing is too overwhelming for some consider doing a box or two a day in a room, that way before you know it your packing is good as done. Getting back to that kitchen or linen cupboard particularly as they usually consume the most boxes and space, leave out sufficient plates, cutlery & utensils to maintain a normal life, prior to the move. Certainly for the over efficient the prospect of not having your favourite cooking pot handy because of your efficient packing strategy will either cause the need for unplanned take away food or frustration. Equally it is important to pack the boxes either clearly marked with felt pen or with a coloured sticker or some other method of finding it at the new home. Unless you can unpack everything the day you arrive in your new home, you may find it frustrating looking for certain items that you were packed, but somewhere went into the abyss between homes. Simply plan ahead with a handful of must have boxes on the receiving end so you can find that mug for a cup of coffee or a spoon to mix it with. Sounds easy enough, although how many of us have devastated a number of boxes looking for that one crucial item.


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Live your life as normal as possible particularly those with kids or pets, they start to feel a little unease when the house is thrown into disarray. You can store the completed packing boxes together in a spare room or area that will not disrupt life, and may actually speed up the removalist process on pick up day. Another handy tip when you empty a cupboard it to give it a wipe down or a scrub straight away. For those leasing a property will know how big a job it can be, having to clean a house from top to bottom in one go. If you are a hoarder skip this paragraph, it is not for the faint hearted. A rule of thumb to consider if you are like the average citizen that moves house on average every seven years, there is plenty of opportunity to collect those “I’ll need that one day” types of items. Here is the theory if you haven’t used it in the last 12 months throw it. Of course if it has some sentimental value or it was your great great grandmothers then keep it. For the rest, you will be amazed at what we collect and will probably never use again. It also saves packing & unpacking not to mention the cost of moving the stuff. There are plenty of worthwhile charities or child care centres if they are toys that would appreciate your junk. The last couple of things to consider is the unpacking. If you get to your new home & you know for certain the unpacking is going to take time then if anything focus on getting your beds set up & made, as you no doubt will be exhausted if you have executed the move yourself. The next thing which will keep life human for you is to unpack that last minute


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kitchen box, the last one you packed before leaving the old home, that box with all those daily used items.

When Families Move

Moving to a new community can be an exciting but sometimes difficult event for a child and a family, depending on the circumstances For example, different issues are raised if the move is due to a parent's promotion rather than divorce, death, or change of family income. Similarly, a child's ability to cope is different if the family is in the military and moving is a necessary and repeated part of life compared to a family moving only once.

The logistics of the move also influence a child's adjustment; moving across town is far less complicated than a move across the country. For many moving is a positive experience, as it brings the opportunity to develop new friendships, pursue new interests, increase social confidence, and learn important lessons about adapting to change. If parents are positive about the move, children will have an easier time adjusting.


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For some children, the prospect of a new school, new friends or even a new bedroom can be daunting. Talk to your children about the move well in advance to enable them to get used to the idea. Let them be honest with you about how they are feeling. They might be a bit nervous about leaving behind friends and this is completely understandable. If this is the first time young people have moved, to leave the comfort of their home can be unsettling no matter how young they are. If your children have moved before this could bring back unpleasant memories. Children who are anxious about moving might show signs of depression, withdrawn behavior or tantrums as the day of the move gets closer. Try to understand and accept how they are feeling. On moving day, babies and young children should be kept safely away from the action. The risk of injury from Removalists carrying large heavy furniture items is always a danger and they will not receive the same level of attention from you. If possible arrange a babysitter for the day and keep a favorite book and toys unpacked. Older children can be a great help and getting them involved with specific tasks can be a source of fun. Reassure your children they will not be left behind. Some Hints and Tips

Include the children in making plans for the move.


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Help them learn about the new city where they will be living.

Allow kids to have some input into how their new room will be arranged.

Make time to have a last visit with friends and family.

Encourage young children to keep in contact with their friends either by phone, mail or email.

Be sure you have an experienced interstate removalist so you can look after the kids

Prepare a surprise package for each child that they can unpack on arrival with each child's favorite things.

Take time out with the family once the major unpacking is done. You shouldn't try to do it all at once.

The first weeks at a new school can be daunting for your child. Being there for them and keeping in contact with their teacher will ensure that you pick up on any behavior changes.If your move involves a big change to your children's lifestyle make sure you talk to them beforehand about the changes. Once your home is back to normal a great way of meeting new people is to get involved with the school. All schools have a P&C Association i.e. Parents &


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Citizens or P&F i.e. Parents & Friends which is a voluntary group of parents who normally meet once a month to discuss issues and fundraising for the school. Children love it when their parents get involved with their school and P&C Associations are always looking for people to help. Same applies with your children's sporting clubs. Younger children who are not in care or at school are able to have their own fun as well at Playgroup. There are numerous groups in all areas and by contacting the Playgroup Association in your region they will be able to put you in touch with your local group. This is also an excellent way to meet new people. The local library is a great source of information. They have brochures on free activities which occur throughout the year in your area. Also during school holidays the library offers classes and shows to keep the children occupied and all is free. The best way to familiarize with the area is to go on family outings on the weekends. Explore and you never know what you might find. Have an adventure and most importantly make the move fun not stressful.

smooth moving ebook - relocating...corporate relocation considerations consider this common scenario...

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