Footnotes
1 Kevoloh v. Carter, 699 So. 2d 285 (Fla. 5th D.C.A. 1997) (citations omitted). This paternity case contains an extensive discussion of domicile in connection with a determination of whether Florida had subject matter jurisdiction and whether personal jurisdiction was acquired.
2 Horvitz v. Commissioner of Revenue, 798 N.E.2d 1046 (Table) (Mass. App. Ct. 2003) (unpublished). (Taxpayer determined to have changed domicile from Florida to Massachusetts when he purchased a Massachusetts residence in order to remain involved in his children's lives).
3 In 2005, a New York domiciled decedent who pays estate tax on $10 million will pay approximately $565,828 more in state and federal estate taxes than an otherwise identical Florida decedent. For more on this topic, see Dean L. Surkin, The Impact of the Decoupling of State Estate Taxes on a Taxpayer's Choice of Domicile, 101 J. Taxation 49 (2004).
4 Fla. Const. art. X, §4; Fla. Stat. §222.14. It should be noted that while recent changes to federal bankruptcy law have reduced the creditor protection available to the homestead, significant creditor protection remains.
5 Fla. Stat. §193.155(1). This often overlooked provision may be worth tens of thousands of dollars to a client who sees the taxes assessed on his or her pricey second home double and triple while domiciliary neighbors pay only incremental increases.
6 I.R.C. §2102(b)(1) allows a decedent who is a nonresident and not a citizen of the U.S. to shelter only $60,000 from the federal estate tax. Some clients, such as those with substantial U.S. assets but total worldwide assets of less than the applicable exclusion amount for U.S. residents (currently $1.5 million), may reduce their tax burden by establishing a U.S. domicile. Note that domicile planning for non-U.S. citizens should carefully consider the effect of any applicable treaty.
7 I.R.C. §121. A domicile change may be postponed until the out-of-state residence is ready to be sold.
8 Due to the low rate and the ease of avoidance of this tax, this factor should not weigh heavily for most.
9 For example, a single client may not want to leave a valuable homestead to minor children in the custody of a former spouse.
10 Note that the test of domicile for U.S. income taxes is lawful permanent residence or substantial presence based on the number of days present, but the test for U.S. estate and gift taxes is domicile. I.R.C. Reg. §20.0-1(b)(1).
11 See, e.g., Estate of Burshiem v. Burshiem, 483 N.W.2d 175 (N.D. 1992).
12 Since Florida does not currently charge a separate state estate tax, Florida has no incentive to intervene in a state estate tax claim made by another state.
13 "The test of intent with respect to a purported new domicile has been stated as 'whether the place of habitation is the permanent home of a person, with the range of sentiment, feeling, and permanent association with it.'" In re Bodfish v. Gallman, 50 A.D.2d 457, 458 (N.Y. App. Div. 1976), quoting In re Estate of Bourne, 181 Misc. 238, 246 (N.Y. Sur. 1943).
14 "A change of residence is accomplished and becomes effective when there is a good-faith intention to establish it, coupled with an actual physical move to the new residence, as evidenced by positive overt acts." Kevoloh, 699 So. 2d at 288. Note that "the intention to acquire a new domicile must be to make a home at the moment, not to make a home in the future." Id. (citation omitted). Buying property, building a home, and other similar steps toward acquisition of domicile are insufficient without further proof that a change has already been made.
15 Note that unlike many other tax saving strategies, domicile change is valid even if the sole purpose is tax avoidance.
16 Estate of Burshiem v. Burshiem, 483 N.W. 2d 175 (N.D. 1992) (citation omitted). (Decedent determined to be a Florida domiciliary for probate purposes, notwithstanding that he had a North Dakota driver's license and hunting license and spent 80 percent of his time in North Dakota, largely based on the declaration in his will that he was a Florida resident); see also Getz v. Rygalski, 611 A.2d 778 (Pa. Commw. Ct. 1992). (Decedent determined to be a Pennsylvania domiciliary notwithstanding a Florida homestead exemption, vehicle registration, driver's license, bank accounts, address on final federal income tax return, and Florida residence eight months of each year, largely based on the declaration in his will that he was a Pennsylvania resident).
17 N.Y. Tax Appeals Tribunal TSB-D-94-(4)I.
18 See, e.g., N.Y. Tax Appeals Tribunal TSB-D-95-(5)I.
19 In re Kartiganer, 194 A.D.2d 879 (N.Y. App. Div. 1979) (Active involvement in business showed continued New York residence in spite of Florida voter registrations, licenses, and will declarations. Note also that Florida wills provided for a New York probate); see also Gray v. Tax Appeals Tribunal of the State of New York, 651 N.Y.S.2d 740 (N.Y. App. Div. 1997).
20 If domicile has been sufficiently established, however, a temporary return to the state of previous domicile to work will not disrupt the domicile because "mere absence with the specific clear-cut bona fide intention of returning will not destroy the residence actually theretofore established." Bloomsfield v. City of St. Petersburg Beach, 82 So. 2d 364 (Fla. 1955).
21 In Judd v. Schooley, 158 So. 2d 514 (Fla. 1963), the Florida Supreme Court approved of a homestead tax exemption for a wife though the husband was a non-domiciliary and they "live[d] together harmoniously" without divorce or separation. See also Bleasdell v. Department of Revenue, 2004 WL 1238355 (Or. T.C. 2004). Note that the income tax implications of split domicile should be considered if the remaining spouse lives in a community property jurisdiction.
22 See John D. Zook, State Tax Obligations Can Survive Out-of-State Move, 23 Taxation for Law 224 (1995).
23 While at least one regional group, the North Eastern States Tax Officials Association, has attempted to bring uniformity to the determination of domicile for tax purposes (adopting a cooperative agreement on determination of domicile in 1996), the current wide variation in methodology leaves many traps for the unwary.
24 Crews v. Bosonetto, 271 B.R. 403 (Bankr. M.D. Fla. 2001).
25 For a general discussion, see Barry A. Nelson and Kevin E. Packman, Florida's Unlimited Homestead Exemption Does Have Some Limits, 77 Fla. B. J. 60 (Jan. 2003).
26 As noted by Barry A. Nelson and Kevin E. Packman in Florida's Unlimited Homestead Exemption Does Have Some Limits, 77 Fla. B. J. 60 (Jan. 2003), an alien debtor can only satisfy the permanent residency requirement necessary to have homestead creditor protection if the debtor is granted a permanent visa or "green card." The protection may be lost if the visa status is not kept up.
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