Estate Planning and Your Residence: When the Grass Really is Greener!

The rules that govern each state’s estate taxes are not necessarily created equal. A person can live, do business, and own real estate in many different places, but legally have only one domicile—or permanent residence—for estate tax purposes. Many states have estate taxes that could exceed the federal estate tax credit. In these cases, it may definitely be less expensive to be domiciled elsewhere.

Thus, your choice of domicile can have expensive ramifications. However, your domicile can be changed with a little strategic action. Obviously, in a situation where you retire, sell your home, and make a permanent move, your domicile may be clear. But, if you are unsure, here are some suggestions to document a change in domicile:

o File income tax returns with your new, permanent address;

o Register to vote in your new area;

o Register your car and obtain a new driver’s license with your new address;

o Move your bank accounts; establish new social contacts, such as church and club memberships; change doctors; give up local memberships from your previous domicile;

o Execute new testamentary documents and attach an affidavit of where you intend to be domiciled; and

o Change your passport address.

Many state revenue departments rely on hard facts, such as where the greatest percentage of your year was spent or which residence has the greatest square footage. Other variations in state laws can also affect crucial details of your estate plan.

Usually, a move from one state to another does not require an earthshaking change in your estate plan. But, check to make sure your estate planning benefits are still intact.


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