The terms “domicile” and “residence” are often used interchangeably in normal conversation. In a legal context, however, their difference is significant, and can have a significant impact on your estate plan. Your domicile is the place where you maintain your permanent residence and where you intend to return for long periods. An individual can only have one legal domicile at a time. A residence, in contrast, is a place where you live and work, but without the intent of permanence.

Unlike prior generations, many people live, work, and recreate across state lines todays. This increased mobility results in ownership of property and formal relationships in more than one state, and can make the determination of domicile difficult. If you are a resident of one state, while claiming a domicile in another state, both states may require you to file a tax return.

This distinction impacts estate planning because where your will is probated is determined by your domicile. Because estate tax laws vary by state, and may differ from federal laws, it is important to ensure that your will is probated in the intended state. In some states, inheritance tax is paid by the recipient of an inheritance that, in another state, would pass to the heir free of state estate taxes. Some states exempt smaller estate from taxes entirely. Another key difference is how states view property ownership. Some states regard all property acquired during a marriage as shared by the couple, whereas some states allow married couples to own property and income separately. Washington State has one of the easiest and cheapest probate processes in the country, but if you aren’t domiciled here, you can’t take advantage of it.

Once you and your attorney have determined the best state for probating your will, you can take certain steps to establish your state of domicile. Generally, domicile is not determined by the length of time you spend in a state. Rather, it hinges on the number and significance of the contacts in your former domicile state and your present domicile state. Have you “moved” or sold your prior residence in your former state of domicile? In which state are your significant business contacts? Where are most of your significant real and tangible personal property located? Where are you registered to vote? Where do you have a driver’s license? Where do you maintain civic, religious, or family connections? And finally, where do you spend most of your time? Though you may think your intent to change domicile is clear, these factors will be used as evidence of your intent.

If you own property in multiple states, give me a call today to discuss whether you are domiciled in the best state for your situation.