Nuances can be important. Consider domicile vs. residence. Two things can be similar but have subtle yet meaningful differences. For example, many people find it hard to understand the difference between a domicile and a residence. After all, both terms deal with where someone lives. However, choosing your domicile may impact your life significantly.
Understanding the Terms
Residence is a place you live for a time. It could be a summer hideaway, a college dorm, or just a place you go to get away from the snowy winters up north.
Domicile is the place you intend to make your permanent home, the place to which you intend to return if you are temporarily residing in another state.
This is important:
You can have a residence in more than one state, but only one can be your domicile.
And the Requirements for Each
Each state sets out residency requirements. In fact, different agencies and institutions within a state may have different residence criteria. Sometimes the requirement is related to time, like an individual must spend 180 days per year in a state to be considered a resident.
In Florida, an individual may establish domicile by filing a Declaration of Domicile with the Clerk of the Circuit Court for the county in which he or she resides. This is a sworn document and should only be filed if the intent is to maintain a permanent home in Florida.
Examples of Domicile vs. Residence.
An individual might maintain residences in more than one state for a number of reasons:
Stephen moved to New York to attend college but fully intends to return to his home state of North Carolina. In that case, his residence is New York state. His domicile is still North Carolina.
Jill moved to Phoenix for a six-month job assignment. She votes in Illinois by absentee ballot and maintains bank accounts there. She has no intention of staying in Arizona but will return home when her assignment is over. Her residence is Arizona, but her domicile is still Illinois.
Finally, Madeline and Joseph live in Florida, though they still own their Massachusetts residence. They have shown an intent to change their domicile to Florida by opening accounts at a local bank, getting Florida driver’s licenses, and registering to vote in Florida. Due to their actions, Florida could now be considered their residence and domicile state.
Domicile and Residence May Affect Your Estate Plans.
One of the most important ways in which domicile and residence concepts affect people concerns taxation. If you are a domiciliary of a particular state, you may have to pay state income tax based on earned income, and your estate may owe a state estate tax upon your death. For this reason, many people choose to make Florida, which does not have a state income tax or a state estate tax, their domicile.
John Mangan is an experienced Florida estate planning attorney, who has been board certified in Wills, Trusts & Estates by the Florida Bar. Call Law Offices of John Mangan, P.A. at 772-324-9050 to set up an appointment or use our online Contact Form.
I'm John Mangan, a seasoned Florida estate planning attorney with a deep understanding of the intricate concepts surrounding domicile, estate planning, and related legal matters. As an expert in Wills, Trusts & Estates, I've been board certified by the Florida Bar, demonstrating my commitment to maintaining the highest standards of proficiency in my field. I bring a wealth of firsthand experience and knowledge to the table, helping individuals navigate the complexities of domicile and residence to make informed decisions about their estate plans.
Let's delve into the key concepts presented in the article:
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Domicile vs. Residence:
- Residence: This refers to a place where someone lives for a temporary period, such as a vacation home, college dorm, or a seasonal retreat.
- Domicile: In contrast, domicile is the place an individual intends to make their permanent home, the location to which they plan to return even if temporarily residing in another state. It's a crucial distinction that can have significant implications.
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Requirements for Each:
- Residency Requirements: Each state establishes criteria for residency, which can vary across agencies and institutions within the state. Some requirements may be related to time spent in the state, such as a minimum number of days per year.
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Establishing Domicile in Florida:
- In Florida, one can establish domicile by filing a Declaration of Domicile with the Clerk of the Circuit Court for the county of residence. This sworn document should only be filed if the intention is to maintain a permanent home in Florida.
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Examples of Domicile vs. Residence:
- The article provides examples to illustrate the distinction between domicile and residence. For instance, individuals may maintain residences in multiple states for various reasons, and their domicile is determined by their intent to return to a specific state.
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Impact on Estate Plans:
- Domicile and residence have a crucial impact on estate planning, particularly in terms of taxation. The article emphasizes that being a domiciliary of a particular state may result in state income tax based on earned income and a state estate tax upon death. The choice of domicile can influence these tax obligations.
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Florida as a Domicile Choice:
- The article highlights Florida as an attractive domicile choice for many due to its lack of state income tax and state estate tax. This choice can be significant in shaping estate plans and minimizing tax liabilities.
In conclusion, the nuances of domicile and residence are vital considerations in estate planning, especially when it comes to taxation. As individuals seek to secure their financial future, understanding these concepts becomes paramount in making informed decisions about where to establish their permanent home and, consequently, their domicile. If you have further questions or need assistance with estate planning, feel free to reach out to me at the Law Offices of John Mangan, P.A.
