Posted by Unifirst Financials & Tax Advisors

This is how you establish a new domicile

This is how you establish a new domicile

Several Northerners migrate to Southern states in the winter and are homeward bound in the summer. Many such migrants fear that spending even a day over six months in another state would imply legal domicile in that state. However, such an implication would not always hold. Some states mandate that before an individual can become domiciled in those states, they would have to satisfy certain conditions. 

An individual may own several properties across the country. Only one of several such homes owned by that person would be defined as his/her domicile, a permanent homestead that he/she will return to after a temporary absence. Such principal homestead would be considered by law as the person’s fixed abode, regardless of how many other homes he/she may own, until the individual decides to change his domicile. 

A person who wished to change his/ her domicile must:

  • Abandon his current homestead
  • Move to and begin to reside in the new homestead
  • Plan to reside permanently in the new homestead (an intended limited period of residence will not translate into domicile)

Legal Implications of Domicile

The state in which your permanent abode is located will determine:

  • The state that will receive your income tax payments
  • The state in which probation of a will and administration of the estate of a deceased will take place
  • The state that will receive inheritance and estate taxes from your estate
  • The state under whose laws judicial orders will be enforced

Corroborating Intention to Return Via Objective Actions

The intention to return defines domicile can be hard to interpret. However, a person’s objective actions can help corroborate such intention. The following are a list of such actions. While physical presence in a new domicile is necessary, none of the others are mandatory. However, the tax authorities will be convinced of your intention to change your domicile if you perform enough of these actions.

Ownership of Property 

You must own property or lease it in your intended state of domicile, with furnishings that indicate an intention to reside permanently rather than to use it on a holiday. In order to underscore your intent to move to the new domicile, you must ensure that you move family picture albums, keepsakes and furniture, among other family heirlooms or items of sentimental value.

Period of Residence                     

Most importantly, you must reside for over 183 days a year in the intended state of domicile. Unless you satisfy such length of residence, some states will not allow you to pay income tax in those states. Thus, residence for tax purposes can be established in some states, such as New York, merely by living there for 183 days or more, in a year.

Identification

Get a new identity document in the form of a driver’s license or registration of your cars in the new state. Registering to vote and applying for a homestead (if required) in the new state will also help.

Establishing Business Relationships

Employing a new doctor, dentist or other professional and moving relevant records to the new state can corroborate your intent. Moving utility accounts, such as credit cards and phones, to the new state will further strengthen your cause.

Establishing Social Relationships

Joining a religious group or club and transacting with local charities in the new state can help cement your intention to change domicile. Simple steps such as arranging family gatherings or subscribing to newspapers in the new state will also go a long way.

Filing Documents

Filing a Declaration of Domicile, if required, as well as your income tax return in the new state can help establish your change of domicile. You can change other legal documents to advertise your intention, such as trusts, estate plans, or wills. You can also change the listed address on your passport.

Moving Bank Accounts

Moving safe deposit boxes and bank accounts to the intended state of domicile will be a strong statement of intent.

Notifying Change of Address

Notify your insurance company, broker, credit card company, any professional organization or business associate, friends and family, regarding your change of address.

Abandoning Previous Domicile

In order to clearly state your intention to change domicile, you would need to abandon your previous domicile, via such devices as:

  • Removal of your name from the voter registration list
  • Surrender of your driver’s license
  • Use of non-resident status, where applicable, for payment of income tax
  • Marking as ‘final’ the last income tax return in the new state, while using the address in the new state
  • Staying away from the old state
  • Closing of accounts in the previous state
  • Changing your status to non-resident in respect of social, religious and club affiliations 
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