Do You Know the Difference Between a Domicile and a Residence?

Nuances can be important. Consider domicile vs. residence.  Two things can be similar but have subtle yet meaningful differences. For example, many people find it hard to understand the difference between a domicile and a residence. After all, both terms deal with where someone lives. However, choosing your domicile may impact your life significantly.

Understanding the Terms

Residence is a place you live for a time. It could be a summer hideaway, a college dorm, or just a place you go to get away from the snowy winters up north.

Domicile is the place you intend to make your permanent home, the place to which you intend to return if you are temporarily residing in another state.

This is important:

You can have a residence in more than one state, but only one can be your domicile.

And the Requirements for Each

Each state sets out residency requirements. In fact, different agencies and institutions within a state may have different residence criteria. Sometimes the requirement is related to time, like an individual must spend 180 days per year in a state to be considered a resident.

In Florida, an individual may establish domicile by filing a Declaration of Domicile with the Clerk of the Circuit Court for the county in which he or she resides. This is a sworn document and should only be filed if the intent is to maintain a permanent home in Florida.

Examples of Domicile vs. Residence.

An individual might maintain residences in more than one state for a number of reasons:

Stephen moved to New York to attend college but fully intends to return to his home state of North Carolina. In that case, his residence is New York state. His domicile is still North Carolina.

Jill moved to Phoenix for a six-month job assignment. She votes in Illinois by absentee ballot and maintains bank accounts there. She has no intention of staying in Arizona but will return home when her assignment is over. Her residence is Arizona, but her domicile is still Illinois.

Finally, Madeline and Joseph live in Florida, though they still own their Massachusetts residence. They have shown an intent to change their domicile to Florida by opening accounts at a local bank, getting Florida driver’s licenses, and registering to vote in Florida. Due to their actions, Florida could now be considered their residence and domicile state.

Domicile and Residence May Affect Your Estate Plans.

One of the most important ways in which domicile and residence concepts affect people concerns taxation.  If you are a domiciliary of a particular state, you may have to pay state income tax based on earned income, and your estate may owe a state estate tax upon your death.  For this reason, many people choose to make Florida, which does not have a state income tax or a state estate tax, their domicile.

John Mangan is an experienced Florida estate planning attorney, who has been board certified in Wills, Trusts & Estates by the Florida Bar. Call Law Offices of John Mangan, P.A. at 772-324-9050 to set up an appointment or use our online Contact Form.