A House Is Not A Domicile

When considering your estate plan, as well as for tax purposes, a person must choose their domicile.  A person can have many ‘residences’ (or houses) but only one domicile.  The selection of domicile versus residence has come to the forefront of Estate Planning issues recently because of the estate of Joan Rivers.  The legal question posed is whether you can be a resident of one state and ‘domiciled’ in another state? Joan Rivers in her will set forth that she was a resident of New York (State), but her domicile was in California (the state she intended to return to).  Joan often traveled between the two states.  California has no estate tax; New York does.

Joan Rivers’ estate has been estimated by some to be $150 million. ( No one really knows the true value of the estate, since the bulk of the estate was in a trust.) Because of the high net worth, the question of domicile becomes very important indeed.

For most retirees who may live only part-time in one state or have a second home(s) in other state(s) it becomes an interesting and important issue of where they are domiciled. To establish domicile in a state it is suggested that the following can help to establish your ‘domicile’ – having bank accounts; having employment in that state; having a mailing address; a driver’s license; vehicle registration; voter registration; having professional contacts in that state, e.g. physician, attorney; attendance/membership in a church; filing federal and state income taxes naming that state; insurance records; and having the state listed on your passport can establish ‘domicile’.  One other question is where your Will was filed? In the case of Joan Rivers, her Will set forth that she was a resident of New York.

The issue is critical for some, since estate taxes vary by state as do inheritance taxes.  Kiplinger Magazine (August, 2014) listed the ten least friendly tax states:  California, Connecticut, New Jersey, New York, Hawaii, Rhode Island, Maine, Minnesota, Vermont and Illinois.  And the ten most friendly states that made the Kiplinger list (2014)?  They were: Delaware, Wyoming, Louisiana, Mississippi, Alabama, Arizona, Nevada, New Mexico, South Carolina and West Virginia.

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About Attorney Barbara Ann Dalvano

Attorney in Denver, Colorado with extensive practice experience in the areas of Estate Planning, Wills and Trusts, Business Succession Planning, Probate, Contract Law.

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