Where Do I Live for Income Tax and Estate Tax Purposes?<\/b><\/p>\n
Domicile vs. Residence<\/b><\/p>\n
Many Connecticut residents live elsewhere for a significant part of the year.\u00a0 For example, you may stay in Cape Cod for the summer, or you may go down to Florida for the winter.\u00a0 For folks who do not stay in the same place year round, the question of where they are \u201cdomiciled\u201d becomes harder to answer.\u00a0 Domicile is a legal term referring to a person\u2019s place of residence\u00a0combined with\u00a0<\/i>the intent to stay in that place indefinitely.\u00a0 A person can have multiple residences, but only one domicile.\u00a0 Another way of looking at it is to say that a person\u2019s domicile is their permanent home base.<\/p>\n
Domicile is important for estate planning purposes because it determines where the deceased person\u2019s estate should be probated. \u00a0It determines where a deceased person\u2019s estate will primarily owe and pay taxes as well.\u00a0 It can also have an effect on who inherits an estate.\u00a0 This is especially true if a person dies intestate (without a valid will).\u00a0 This is because state law determine who is entitled to inherit the estate.\u00a0 There can be significant differences between inheritance laws from state to state.\u00a0 This includes whether certain provisions in a Will are going to be respected in the probate process.<\/p>\n
Determining the domicile of people who live in one place all year is simple.\u00a0 However, it is sometimes hard to determine the domicile of people who divide their time between two or more states.\u00a0 The way a court determines where a person is domiciled is to look at the intent of that person to return to their permanent home based on his or her actions.<\/p>\n
States look at factors such as:<\/p>\n
how much time you spend in a state,<\/p>\n
whether you have family or social ties there,<\/p>\n
where the majority of your personal property is located,<\/p>\n
where you voted, and<\/p>\n
whether you conduct business there;<\/p>\n
to determine your intended state of domicile.<\/p>\n
Here are the minimum actions you can take to clarify your intended domicile:<\/p>\n
If you have questions about the tax implications of your state of domicile or to learn about potential estate tax planning opportunities, call our office at 888-822-8778 to schedule a consultation.<\/p>\n