Understanding Domicil Planning and its Impact on Taxes, Estate Planning, and More

The issue of where a person is domiciled can arise in a number of legal contexts.Estate and income tax implications may be the most common examples, but other contexts include divorce, estate planning, asset protection, and voter registration. For example, the State of Florida, in contrast to the Commonwealth of Massachusetts, imposes no estate, gift, or income tax. People who earn an income and own residences in both Florida and Massachusetts would be wise to consider such factors when engaging in domicil planning, since the state of one’s domicil determines whether or not he or she would be subject to that state’s taxes.

As an initial matter, it is important to understand that there is a difference between a person’s residence and a person’s domicil; these are not interchangeable terms. A person may have many residences in many different cities or towns, states, or even countries. However, a person can have only one domicil, “one true, fixed, and permanent home, determined by established common law principles and the facts and circumstances of each case.” 830 CMR 62.5A.1(2); Massachusetts’ Non-Resident Income Tax Regulation.

There is no universally adopted definition of domicil, but the states and the Internal Revenue Service share a basic understanding of the term’s meaning. Both Massachusetts and Florida rely on their respective common law to define the concept. Massachusetts case law traditionally defined domicil as the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode, Commonwealth v. Davis, 284 Mass. 41, 50 (1933), and, more recently, as the place where a person dwells and which is the center of his domestic, social and civil life, Dotson v. Commissioner of Revenue, 82 Mass.App.Ct. 378, 383 (2012), citing Reiersen v. Commissioner of Revenue, 26 Mass.App.Ct. 124, 125 (1988). Florida’s case law defines domicil as the place where a person has fixed an abode with the present intention of making it his or her permanent home. Keveloh v. Carter, 699 So.2d 285, 288 (1997), citing Minick v. Minick, 149 So.2d 483 (1933). The IRS defines domicil as the permanent legal home that a person intends to use for an indefinite or unlimited period, and to which he or she will return after a temporary absence. IRS Publication 555 (12/2024), Community Property. All, though, require a concurrence or convergence of a person’s physical presence and their intent.

A person’s domicil cannot be lost until a new one is acquired. He or she can change their domicil by establishing a physical residence in a different state with the intent to remain at the new residence and make it their home permanently or indefinitely, for the time at least. See Reiersen, supra, at 125. However, effectuating a change of domicil is not simply a matter of moving to another state and declaring it one’s intent to remain there. It requires both time and planning. In addition to the requirement of establishing a physical residence, the criterion of intent also must be satisfied. There are myriad factors that a tax auditor or trier of fact will take into consideration should a person’s domicil or change in domicil be called into question or challenged.

A by no means comprehensive list of those factors includes the following:

  • The residence address from which one’s federal income tax returns are filed;
  • The residence address from which one’s nonresident state income tax returns are filed;
  • The residence address recited in one’s last will and testament;
  • The residence address recited in one’s advance directives;
  • The residence address recited in any other of one’s legal documents containing such a recital;
  • Where applicable, the filing or recording of a declaration of domicil and/or homestead exemption in accordance with state law;
  • The state of issuance of one’s driver’s license and the residence address listed thereon;
  • The state in which one’s motor vehicles are registered and the residence address of registration;
  • The residence address listed on one’s passport;
  • The state in which one’s bank accounts/safe deposit boxes are kept and the residence address listed on those accounts;
  • The residence address listed on one’s insurance policies, including, but not limited to, homeowners and auto, and, if applicable, the primary address listed thereon;
  • The residence address listed on one’s investment accounts;
  • The state of one’s voter registration;
  • The state in which one’s family, business, social and political ties are located;
  • The state in which one’s pets are licensed;
  • The state in which one’s valuable tangible personal property is located;
  • The continued ownership of real estate in one state after moving to another state;
  • The discontinuance of nonessential utilities/services after moving to another state;
  • The amount of time spent at one’s residence in one state as opposed to one’s residence in another state; and
  • The state in which one’s medical and other professionals are located.

As stated, the above is not an exhaustive list of factors that are considered in determining a person’s domicil, and each case will be inherently different and fact-specific. MacLean Holloway Doherty & Sheehan, P.C. has had the pleasure of successfully assisting individuals with domicil planning during their lifetime as well as assisting personal representatives with determining the appropriate state for probating their decedent’s estate. We would be happy to use our expertise to help you navigate either scenario.

The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy of the content, the details presented may not apply to every situation or jurisdiction. For advice specific to your individual circumstances, we recommend consulting with a qualified attorney.