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Thirteen Tips for Clients Moving to Save Taxes

What do “Morning Joe’s” Joe and Mika know that your clients don’t?

It recently was reported that Joe Scarborough and Mika Brzezinski have been broadcasting their “Morning Joe” news show from their new home in Jupiter, Fla. with backdrops of Washington, D.C.

As taxpayers receive their 2018 tax bills, it’s anticipated that there will be large migrations to low tax domiciles in an attempt to reduce 2019 taxes.

However, it’s not quite as easy as simply moving to a new house or spending 183 or more days in a low tax jurisdiction. Severing domicile requires affirmative actions to demonstrate the client’s desire to leave and establish a new domicile elsewhere.    

“Domicile” refers to the place where an individual maintains her permanent home and the place to which the individual intends to return whenever absent. For most states, two essential elements of domicile are: (1) an actual residence, and (2) an intent to remain indefinitely. While an individual can be a “resident” of more than one location, an individual can only have one domicile. Moving to a new location doesn’t effect a change in domicile unless the individual manifests an intention to make the new residence her domicile. Once a domicile is established, the domicile continues until the individual moves to a new location with the bona fide intention of making her permanent home in such new location.

If your client wants to be considered a domiciliary of a particular state, he’ll need to take as many of the following steps as practicable to demonstrate his intent to make his permanent home in that state and abandon his prior domicile. After all, it takes more than merely spending 183 days in a low tax jurisdiction to change domicile.  

By not taking the additional steps to indicate his intent to make his new state his permanent home and abandon his old domicile, your client may be subject to unintentional state income and estate taxes and other costs associated with a state tax audit. Clients should take care to avoid conflicting domicile circumstances when planning for a domicile change.

Here are some steps your clients should take if they’re looking to establish a new domicile.

This gallery is adapted from the authors’ original article in the April 2019 issue of Trusts & Estates.

Source | easywealth.fun

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