Domicile is one of those words that courts and lawyers toss around and expect people to understand. In fact, its meaning can be tricky.
Simply put, your domicile is your home—the state you consider your permanent place of residence. If you aren't living there right now, then it's the place to which you intend to return and make your home indefinitely. You can have more than one residence, but only one domicile.
When or why does the question of domicile arise? Your domicile can have an effect on many legal issues, especially taxation.
Most commonly, it comes up after a state's taxing agency (department of revenue or taxation) rules that someone is domiciled in the state. A taxpayer (or the taxpayer's surviving family members) who wants to dispute that determination must go to court.
Most states impose an income tax on people who live or work in the state. If you're domiciled there, you pay tax on all of your income; if you're not, you pay tax only on income derived from sources in the state. (Even if your domicile is elsewhere, however, you may be assessed tax like a domiciliary if you are a "resident" under state law.)
Domicile and State Estate Tax
Fewer than 20 states impose their own estate tax—that is, a state tax on assets left at death. If you're domiciled in one of these states (such as New York or Massachusetts), your survivors might end up paying a tax bill that wouldn't be due if your legal domicile were in a non-taxing state (such as Florida or Arizona).
If surviving family members need to start a probate court proceeding to distribute your assets to the people who inherit them, they must begin it in the state (and county) where you were domiciled at your death.
All states have residency requirements that you must meet in order to get divorced in that state's courts. Even when the laws don't use the term "domicile," courts in many states have held that "residency" means essentially the same as domicile in this context. In other words, most states require that you've been living in the state for the required amount of time before you file for divorce and that you plan on staying there indefinitely.
Some factors that indicate where you're domiciled include where you live, vote, register your car, and where your spouse or partner and children live. But domicile is fundamentally a question of your intent—which state do you consider your permanent home?
Example: Harry and Simone have lived in New Jersey most of their lives. They've owned their New Jersey house for 30 years, their tax returns list their New Jersey address, and their wills declare that they're residents of New Jersey. But they now spend six months of the year in Florida, own a house in a resort community there, vote there, and have a car registered there. Where is their legal domicile? If there's a legal battle, the outcome will depend on evidence of which one they consider their permanent home. Unless they've transferred most of their important activities (see below) to Florida, there's probably not enough evidence to show that they intended to change their domicile from New Jersey to Florida.
If it isn't clear which state is your legal domicile, decide which one you want it to be, and then take steps to make sure that state will legally be considered your domicile.
Owning a home in a state, or spending most of your time there, isn't enough to make it your domicile. Because the crucial factor is your intent, take every opportunity to show or declare that the preferred state is your permanent residence.
For example, it's important to use your in-state address for your:
In your estate planning documents, including your will, living trust, powers of attorney, and healthcare directive, you can also make an explicit statement that the preferred state is your domicile. Most wills, for example, begin with a statement of domicile. Make sure the documents comply with the preferred state's laws.
Here are some more steps you can take to show that your life is centered in the preferred state:
It's not enough to take these kinds of steps to establish a new domicile; you must also show that you intended to give up the old one. So these actions are also important: