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KASS: Establishing ‘domicile’ in one state

Q: My husband and I are what are called “snowbirds.” In summer we live in New England, but move to Florida when the weather gets cold. We have been asked where we are domiciled but we don’t understand that concept. Can you explain? Holly.

A: Dear Holly, I will try, but it’s not a simple concept. And different states have different requirements so as to establish “domicile.”

Where you are domiciled can have significant impact on your financial situation, as well as how you plan your estate. In your case, you “reside” in both the northeast as well as in Florida. But where are you “domiciled”?

Oversimplified, domicile is what you consider as your “permanent” home; it’s where you spend at least six months and one day in the state per year.

Why is it important to clarify your domicile? It is because many things – including income tax obligations as well as which state law will control your estate – depend on where you are domiciled.

How do you prove domicile? There are many ways. Where are your state income taxes paid? Where do you vote? Where is your car registered? Do you own real estate in only one state? Where are your attorney and your accountant located?

All these issues are relevant if you are asked to prove where you are domiciled. Remember, you can have many residences but you can only have one domicile.

 

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Q: My son is disabled and I am his guardian. His grandmother gifted him a home by “general warranty gift deed.” I am not sure how to proceed. I want to sell and put money in trust for him, but I don’t know where to start. I’m not sure how to get the deed recorded and what steps are needed. Do I need a real estate or a guardianship attorney? Please help. Kay.

A: Dear Kay, You need an attorney, preferably one with a real estate background. That lawyer will assist you in recording the deed, although you can go to the Office of the Recorder of Deeds in the county where the property is located and record it yourself. I have learned over years of experience (and sometimes frustration) that most local government staffers are more than willing to assist their own neighbors.

I am assuming there is no mortgage on the property. If that is correct, then you may want to consider obtaining a loan on the property. If the property is in a good area and it is anticipated its value will increase over the years, why not keep it for a few more years.

But if you decide to sell, please discuss this with a tax professional. There may be tax consequences upon the sale.

Your attorney will also assist you in finding a real estate broker/agent to sell. You will be asked to sign a number of legal documents – a listing agreement, certain state required disclosures and ultimately a real estate contract – and you should make sure your lawyer approves each document before you sign.

If money is a problem, many lawyers will agree to represent you and defer receiving payment until the house is sold, at which time payment will come from the sales proceeds.

 

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