Are You Domiciled in Florida?
It is that time of year. Many are returning to Florida after a summer in cooler climates. But, are they returning to their home of domicile? Here is an article I decided to re-publish as a refresher on this important issue:
The migratory snowbirds are returning. Are they returning “home” or merely to their Florida residence? One may have multiple residences, but only one home/domicile.
Florida’s benefits extend far beyond warm climate and sandy beaches. Since Florida does not impose an individual income tax, gift, estate tax and generation-skipping tax, or tangible tax and has favorable asset protection opportunities, it is far more beneficial to be domiciled in Florida. Typically, domicile is not something one gives much thought to, but in today’s tumultuous economy, domicile planning can take on a whole new meaning. Establishing, maintaining and preserving one’s Florida domicile can be very beneficial.
Domicile is not the subject of an exact or precise definition; rather, domicile is a state of mind. Your domicile is where you intend it to be. Domicile is meant to be the place where one has established one’s permanent home from which when one has departed, one is considered to be away from home, and to which when one has returned, one is considered to have returned home.
The best proof of domicile is one’s own words and actions. Evidence of intent to establish a domicile may include such acts as voter and car registration, driver’s license, filing income tax returns from a Florida residence, transfer of bank and brokerage accounts, executing a new will, living will and/or health care directive, location of safety deposit boxes, filing of a homestead exemption and membership in clubs and churches.
Many states, such as New York, New Jersey, Vermont, North Carolina and Illinois, just to name a few, impose many of the various taxes mentioned above. Tax rates range from 7% to 10% on income and up to 55% on estates! Avoiding tax reach of these states can save significant dollars. With budget deficits looming, many states have become more and more zealous about increasing their revenues and consequently more aggressive in challenging one’s domicile. Some states, such as New York, have even established a separate department that concentrates on challenging the change in domicile of its former residents through income and estate tax audits.
Many states have a statutory residence based on time spent in state. In addition, states may also consider other factors such as:
a) size and value of one’s respective homes as well as continuing the possessions at each location;
b) active, in state, business involvement as indicated by phone and email records;
c) location of items of “significant sentimental value” such as heirlooms, personal property and even family photo albums.
Establishing a Florida domicile will also afford one significant asset protection from creditors. Many states extend some form of creditor protection to its residents, but few as beneficial as Florida. Only some states, including Florida, exempt one’s homestead from creditor claims. In Florida, other assets exempted from reach of creditors include life insurance proceeds and cash surrender values, annuities, retirement benefits and IRAs, to name a few.
In conclusion, if one continues to own a home and spends significant time in another state, attention to domicile planning is essential. One should consult with one’s financial planner, accountant or attorney to establish, preserve and maintain one’s Florida domicile.
Michael D. Chiumento is Founder of Chiumento Law. You may contact him at 386-445-8900.
About the Author
Michael D. Chiumento founded Chiumento Law, PLLC in 1974 and is the senior partner. His practice is focused on Estate Planning and Elder Law, Guardianship, Probate and Trust Administration, Commercial Law Loaning, and Business Law. Mr. Chiumento is an active member of the Flagler County community. He has served as the president of the Flagler County Bar Association and the Flagler County Chamber of Commerce and has served as the attorney for local governments, such as the city of Flagler Beach and the Flagler County School Board. He also is a past member of the board of directors for Barnett Bank and was the founding director of Cypress Bank, Cypress Coquina Bank, and Intracoastal Bank.