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Residence and Domicile

It is widely known that many states do not impose estate tax. Here in the Northeast, it is common to hear someone say that she is a Florida resident, and thus

(i) pays no income tax and (ii) will avoid state estate tax.

True enough, if actually a resident and domiciliary. Residence for income tax purposes and for estate tax purposes are based on separate factual considerations.

Income tax residence tends to be based on facts (e.g., number of days in a state) while a person's domicile for estate tax is "the place the person intends to stay in/return to on a permanent basis" - a subjective standard, determined based on objective indicators.

Massachusetts, for example, requires in certain circumstances that a "Non-Resident Affidavit" be filed for decedents, to assist the Commonwealth in their determination of domicile for estate tax purposes. The questions on the form can be instructive.

It is important to understand the issues, reach a realistic conclusion, and plan accordingly.

This blog is not intended to constitute, and does not constitute, legal advise to anyone or any specific situation. See also our legal notices.

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