For many people, Florida is a tax haven. Florida does not have an income tax, nor does it have a separate estate tax as many other states do. If you are spending part of your time in Florida, and part of your time in another state, the issue could arise as to which state can subject you to its laws for tax purposes. You may be what is commonly referred to as a “Snowbird” or a “Snowflake”. The key to resolving this issue will be in determining where you are “domiciled”. Although a person can have many residences, you can only have one domicile. Essentially, domicile is that place which you intend to be your primary home. Since the courts can’t look inside your mind (at least not yet), your intent is demonstrated by a showing of certain objective manifestations. Some people simply think that because they spend less than six months in Florida each year, they cannot establish Florida domicile. Other people think that because they have a larger and more expensive home in another state, that they cannot establish Florida domicile either. While these factors may be considered, they are not determinative. Generally, no single factor will be determinative. Rather, it is a series of facts and circumstances taken as a whole. The courts have established certain guidelines to determine the intent of a person. The principal factors which are considered in determining your domicile are as follows:
- Where you physically reside.
- Where you vote.
- The state in which you are registered for driver’s license purposes.
- Where your automobile is registered.
- The address utilized on your federal income tax return.
- Whether you fulfill the tax obligations of a Florida resident.
- Where your religious and social affiliations are maintained.
- Whether the homestead exemption has been claimed for property tax purposes.
- Any other factors that demonstrate intent to be a Florida domiciliary.
Thus, to strengthen your assertion of being a Florida domiciliary, you should do the following:
- Declare in your Will that you are a legal resident of Florida.
- File a Florida Declaration of Domicile with the Clerk of the Circuit Court.
- File your Federal Income Tax Return to the IRS office in Atlanta, Georgia.
- Obtain a Florida Driver’s license.
- Register your automobiles in Florida.
- Own a home in Florida and file for the homestead exemption.
- Vote in Florida.
- Maintain bank accounts and a safe deposit box in Florida. Florida does not seal its safe deposit boxes upon the death of a joint tenant.
- Join a church or synagogue in Florida (but only if you are religious enough to do so).
- Join social and civic organizations in Florida. For example- golf and country clubs, Rotary clubs)
Keep in mind that Florida will not be the state that will object to your establishing domicile in Florida. Indeed, Florida will welcome you with open arms. It is the other state in which you reside that may challenge your position. Thus, to the extent that you can reduce your ties in that state, your case will be further strengthened. Of course, if you maintain a full time job in that state, obtaining Florida domicile will not be so easy (although perhaps you could have the status of your employment changed to that of a consultant instead of an employee).
If you own a substantial home in the other state, it may be advisable to arrange an inter-family gift or sale of the home to your children or to a trust for their benefit (possibly an intentionally defective grantor trust-a discussion of which is beyond the scope of this article) . If you have owned your home for more than two years, you may be able to do this with minimal capital gains exposure. Such a sale would also eliminate the need for an ancillary probate administration of the property upon your death. Another strategy might be to deed the home to a corporation or limited liability company (owned by you) so that it will not be titled in your name individually. This strategy could also prevent the property from being subjected to estate taxes in that state upon your death by converting the nature of ownership so that you technically do not own an interest in real estate at death.
Conclusion
If you need assistance in establishing Florida domicile, consult an attorney that specializes in estate planning and has experience in this area of practice.
Mark has been practicing law in Boca Raton for over 25 years. He is Board Certified in Wills, Trusts and Estate law and is also a CPA. His office address is 1801 N Military Trail, Suite 203, Boca Raton. He can be reached at mark@markschaumlaw.com or 561-750-7575.