What's My Domicile?
In an increasingly mobile society, your “domicile,” the place that you consider home, may or may not be the state where you currently live or spend most of your time. In cross-border areas, many individuals work in one state while maintaining their home in a neighboring state. Sometimes individuals leave their home state to live someplace else for work or to attend school. Sometimes individuals own several homes or businesses in different states. Why does it matter? For estate planning purposes, it is important to determine your domicile because that is the state whose law must be followed when drafting estate planning documents and determining their validity. If married, your domicile also effects the rules regarding the characterization of your property as separate property, community property, or quasi-community property. When someone dies, the state where domiciled generally determines any state inheritance or estate taxes, the rights of the surviving spouse, and how the estate must be administered.
Under common law, you always have one domicile that continues to be the same place until you form the intent to make some place else your home while being physically present in the new location. In California, “residence” is synonymous with domicile in Government Code section 244, which provides these statutory rules to determine the place of residence:
(a) It is the place where one remains when not called elsewhere for labor or other special or temporary purpose, and to which he or she returns in seasons of repose.
(b) There can only be one residence.
(c) A residence cannot be lost until another is gained.
(d) The residence of the parent with whom an unmarried minor child maintains his or her place of abode is the residence of such unmarried minor child.
(e) The residence of an unmarried minor who has a parent living cannot be changed by his or her own act.
(f) The residence can be changed only by the union of act and intent.
(g) A married person shall have the right to retain his or her legal residence in the State of California notwithstanding the legal residence or domicile of his or her spouse.
Change of Domicile
When you have ties to more than one state, there may be an opportunity to select the domicile that works best for you. To establish a new domicile, some actions to prove your intentions include: registering to vote, registering your vehicle and obtaining a driver’s license, establishing local bank accounts, informing insurance and financial companies and government agencies such as the Social Security Administration of a change of address, filing state income tax returns, reciting the domicile in estate plan documents, and joining local organizations.
Before making any change, you should seek advice from a CPA or tax attorney to evaluate the potential tax consequences. You also should be aware that some state laws can apply based only on physical presence in the state regardless of whether there is any intent to change your domicile such as vehicle registration requirements in California.
This blog only provides a general overview based on current California law. Each individual estate planning situation requires an independent analysis of the specific facts and circumstances involved. [Disclaimer]
Our estate planning team at Naimish & Lewis can advise you on estate planning, trusts and estates administration, and probate related matters such as probate administration, conservatorship and guardianship. To schedule an initial consultation with an attorney at our firm, please contact us.