Domicile – Where Do You Live For Estate Tax Purposes?

By Jennifer Castranova, Esq.

As more states look for revenue, the issue of domicile becomes important because it determines the state where you will pay estate taxes.  Generally, domicile is acquired when two things occur at the same time: (1) an actual physical presence in a particular place and (2) an intention to make that place a permanent home.  Lyon v. Glaser, 66 N.J. 259, 265 (1972.) In Lyons, the decedent died at age 85.  She had lived in New Jersey for most of her life, but had spent the last two years living in Baltimore with her son.  She did not sell her New Jersey home, which remained furnished.  She would visit the New Jersey home for one month each year.  The Court held that because all of the circumstances indicated that the decedent had no intention to return to New Jersey permanently, she had changed her domicile to Maryland for purposes of the estate tax.

In regards to establishing domicile, the New Jersey Supreme Court has commented:

“A very short period of residence in a given place may be sufficient to show domicile, but mere residence, regardless of its length, is not sufficient.  It has been said that concurrence, even for a moment, of physical presence at a dwelling place with the intention of making it a permanent abode, effects a change of domicile.  And once established, the domicile continues until a new one is found to have been acquired through the same tests.”

Id. (citations omitted.)

It is also well accepted that no person is without a domicile. Therefore, in the eyes of the law, a presumption exists that an individual continues to be domiciled in their most recent state until a new domicile is acquired.  Id. at 278 citing 25 Am. Jur. 2d. Domicile, §16, p.13 (1966.)

There are numerous ways to manifest intent to establish domicile:

  • Switch your “address of record” for everything possible to the new state, including but not limited to voter registration, driver’s license, social security, Medicare, financial institutions (bank, brokerage and other financial accounts), credit cards, all insurance coverages, magazine subscriptions, memberships (social, religious, charitable), and federal tax returns.  Use the new address on every document you fill out.
  • Sell the residence in the former state of domicile.  Even if the home is only on the market, it evidences an intention not to return to the former state.
  • Acquire a residence in the new state.  Move your furniture and personal things there.  Having your personal belongings in the domicile state evidences your intent to remain in that state.
  • Spend significant time in the new state – more than the former state or any other state.  Be aware of any requirements that you be in the new state for a certain number of days.
  • Become active in charitable and social activities in the new state.
  • Establish relationships with medical professionals in the new state.
  • Update all your estate planning documents to recite your new domicile and conform to the new state’s formalities.

Remember, the test for domicile depends on the specific facts and circumstances in any given case.  The above list provides indices of domicile – it is not a checklist.  If you are considering changing domicile you should consult with your attorney to ensure that you have done all that is necessary to effectuate such a change.

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