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Special Considerations Regarding Domicile in Florida

Though the words are often used interchangeably in casual conversation, domicile and residence are two distinct legal concepts.  Your domicile is the place you intend to make your home.  You may be a resident of more than one state, but you are domiciled in only one state.  Domicile is indicated by a number of factors, which can include the location of your principal residence, bank accounts and motor vehicles, your driver’s license and voter registration, and membership in local organizations.  Residence is usually determined by the amount of time you spend at a given place.  In most cases, you are a resident of the state in which you are domiciled.  But you might also be a resident of another state if you spend enough time there during the year.

WHY DO DOMICILE AND RESIDENCE MATTER?

The location of your domicile has important estate planning consequences because your state of domicile will assert primary authority to tax your estate.  As a result, because states have different gift, estate and succession taxes, your choice of domicile may affect the amount ultimately received by the beneficiaries of your estate.  States also have different laws regulating other estate issues that may be important to you, such as who is eligible to be appointed your executor or personal representative.  For example, Florida limits personal representative appointments to Florida residents, nonresident relatives and resident banks.

For many people, domicile is most important for income tax purposes, although it may also affect other rights and privileges, such as professional or recreational licenses and access to state land.  The states have different income tax rates and certain states, including Florida, have no state income tax.

CHANGING DOMICILE OR RESIDENCE

If you will be living in more than one state for any period of time during the year, you should consider whether this will affect the determination of your residence or domicile.  If the move is temporary, or if property is maintained in your original home state, it may not be appropriate to change your domicile or to establish resident status in the new state.  However, if a change in domicile or resident status may be advantageous, you might want to take steps to establish domicile or residence in a new state. It is important that your domicile and residence status is clear.  If a decedent’s domicile is not clear, more than one state may try to claim the decedent as a domiciliary and assess death taxes.  Confusion about resident status can also result in complicated income tax problems, particularly if care is not taken to preserve the right to claim a deduction for income taxes paid to another state.  In either case, clear and consistent action now can avoid expensive difficulties later.

DOMICILE IN FLORIDA

With no income tax, no estate tax, and the abolishment of the tax on intangibles, Florida has become a particularly appealing state in which to be domiciled.  As a resident of Florida, you may also be able to obtain some relief from the state’s increasing property tax rates (which have increased, in part, because of the lack of income and estate tax revenue) as well as asset protection through the homestead exemption.

Domicile is a subjective concept that depends on your intent.  However, when disputes arise over a person’s domicile, courts look at a number of objective factors to aid them in determining a person’s domicile.  In order to provide evidence of your intention to change your domicile to Florida, you may consider taking the following steps:

  1. Spend as much time in Florida as is practicable and keep a record of the days you spend in Florida and other states throughout the year.  Ensure that you initially spend at least 183 days (and preferably longer) in Florida.  Please note that this represents a minimum amount of time and mere presence for such period will not ensure that Florida will be treated as your domicile, especially if you have not also taken the other steps detailed in this checklist.
  2. File a Declaration of Domicile form in the office of the Clerk of the Circuit Court (County Comptroller) of the county of your Florida residence indicating change of domicile to Florida.
  3. Register to vote in Florida and actually vote during elections.  Cancel registration in former state of domicile.
  4. File Federal income tax returns with appropriate district for a Florida domiciliary.
  5. Discontinue filing resident income tax returns in state of former domicile.  Discuss with us or your accountant the advisability of notifying tax officials in state of former domicile of change of residence.
  6. Use your Florida address in contracts, deeds, passport and all other legal documents.
  7. Execute new estate planning documents as a Florida domiciliary.
  8. Claim Florida homestead exemption from real property taxes.  The homestead exemption must be filed in person between January 1 and March 1 at the appropriate property appraiser’s office.
  9. Consider reducing tax exposure in prior state of domicile by converting real and personal property into intangible property through transfer to an entity such as an LLC.
  10. Change the registration of your automobile and pay automobile license fees to Florida.  Obtain a Florida driver’s license.  Relinquish license and plates in prior jurisdiction.  Insure vehicles in Florida.
  11. Give notification of change of address for all charge accounts and credit cards.
  12. Transact business in Florida.
  13. Transfer bank accounts to Florida.  Change the address of your securities and bank accounts to show your Florida address.
  14. Move safe deposit vault to Florida.  Keep valuables, keepsakes and family mementos in Florida residence.
  15. Use your Florida address when registering at hotels.
  16. Transfer any church or temple membership to Florida.
  17. Obtain library card at Florida local library.
  18. Shift charitable giving from organizations in state of former domicile to organizations in Florida.
  19. Join Florida clubs.  Change status in out-of-state membership clubs from resident to non-resident.  Withdraw membership in any club outside of Florida where domicile in such state is a prerequisite to holding such membership.
  20. License pets in Florida.

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U.S. Treasury Circular 230 Notice:  Any U.S. federal tax advice included in this memorandum is not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties.

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