Dealing With Domicile

When comedian Joan Rivers died last September, a provision in her estate plan named her state of residency as New York, but her domicile as California. 

Though unusual, this was done to take advantage of the tax situation in each state.  New York has a state estate tax, whereas California does not.  Yet Rivers’ will was filed through the New York legal system, her primary residence, and probate usually takes place in the state of domicile. 

Domicile is typically a question of fact based on the individual’s intent to remain in, or return to, a particular state.  Factors indicating domicile are where they vote, in which state their car is registered, the address listed on their tax returns, etc.  Estate planning documents can also state a clear intention of domicile.  Thus, clients who are considering establishing a domicile different from their current one should prepare well in advance. 

There are multiple benefits to establishing domicile in other jurisdictions.  For example, fewer than 20 states have their own estate tax, and the exemption levels tend to run far below the federal exemption of $5.34 million per estate.  While a client can do everything to avoid the federal estate tax, his or her heirs could get stuck with a large estate bill. 

See Tom Nawrocki, State Estate Tax: Dealing With the Domicile Issues, Life Health Pro, Jan. 21, 2015.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.