Estate Planning Lawyer

Changing Domicile and Residence from

New Jersey to Florida

Domicile and “Statutory Residence” for Income Tax Purposes

Domicile is a technical legal term. While residence requires physical presence in a state, domicile requires physical presence plus the intent to make that state your fixed or permanent home. Domicile is the place you regard as your permanent home – the place to which you intend to return after a period of absence.

 

You can have only one domicile. Once established, your domicile continues until you move to a new location with the intent to establish your permanent home there and to abandon your original domicile. Moving to a new location, even for an extended period of time, does not change your domicile if you intend to return to your original domicile. Thus, if you are domiciled in New Jersey, you are a resident for income tax purposes, and all of your income, regardless of its source, will be taxable.

 

Even if you are successful in changing your domicile to Florida, if you return to New Jersey for more than 183 days during the calendar year and maintain a home in New Jersey, you will be classified as a “statutory resident” under New Jersey tax law. Like resident taxpayers, “statutory residents” are subject to state income tax on all of their income, regardless of its source.

 

If you maintain a home in New Jersey, but report that you are a nonresident for income tax purposes, it is important to keep a log of the dates that you are visiting New Jersey. If you are audited, you will be asked to produce records to show the specific days that you were in (or out) of New Jersey. Tax auditors may seek cell phone bills, credit card statements, bank statements, airline tickets and E-Z Pass records to confirm the accuracy of your claims. Partial days count as full days for New Jersey income tax purposes.

 

While spending 183 or fewer days in New Jersey will prevent you from paying income tax as a statutory resident (assuming you are not domiciled in New Jersey), the amount of time you actually spend in Florida is also important. It is important that you actually spend more time in Florida than you do in New Jersey. For example, if you spend five months in New Jersey, three months in Florida, and four months in a third jurisdiction, New Jersey may assert that you did not abandon your domicile in New Jersey.

 

Maintaining a Home in New Jersey

 

Maintaining a second home in New Jersey will not automatically classify you as a New Jersey resident taxpayer. It depends on your use of the New Jersey residence relative to your use of the Florida residence coupled with your ability to document your community ties to Florida.

 

The value of your Florida home should be significantly greater than the value of your New Jersey home. Your Florida residence must be used as your primary home (not your vacation home) and you must be able to document this use. 

 

If you retain a home in New Jersey, it is important to:

 

  • Take all affirmative steps to establish your new Florida domicile;

  • Not claim a homestead rebate for your New Jersey residence after moving;

  • Keep records of days spent in each state;

  • The residence in New Jersey should be much smaller and require less maintenance; and Move items of sentimental value to the Florida home. If any of these items have high monetary value insurance records should reflect their Florida location.

  • As discussed above, the concepts of domicile and statutory residence are distinct for income tax purposes. If you maintain a second home in New Jersey, you must satisfy two tests. First, you have to demonstrate that you are not domiciled in New Jersey, and second, if you are not domiciled in New Jersey that you did not permanently maintain a home there and spend more than 183 days there.


Relevant factors in determining domicile include:

  1. The address you receive bank and brokerage statements, bills, and general correspondence.

  2. The physical location of a safe deposit box you use to store valuables.

  3. Location of auto, boat and airplane registrations.

  4. Location of your personal driver’s license.

  5. Where you are registered to vote. (And, vote often… even off-year elections).

  6. Where you file for homestead exemptions.

  7. Club memberships.

  8. Nature of telephone, cable and utility services at each residence and the activity at the location.

  9. The reference in wills, trusts and other legal documents that a particular location is your place of domicile.

  10. Your active involvement in organizations, particularly where physical presence is involved.

What does it mean to be a “resident” for wealth transfer tax purposes?

For purposes of the New Jersey estate tax (if it is reinstituted) and New Jersey inheritance tax, residence and domicile are effectively equivalent terms. 

 

Domicile for New Jersey estate taxes (if it is reinstituted) and inheritance taxes means the place where you have your permanent home. It requires both physical presence and the intent to have your domicile in New Jersey. 

 

The major difference between income tax and inheritance tax treatment is that, for income tax purposes, a taxpayer who changed their domicile to Florida can still be deemed to be a statutory resident of New Jersey if he or she maintained a home and spent more than 183 days in New Jersey. Thus, for example, an individual who changes his domicile to Florida but still spends more than 183 days in New Jersey will be subject to New Jersey income taxes, even though they are domiciled in Florida for estate and inheritance tax purposes.

 

New Jersey Nonresident Inheritance Tax Issues

 

Even if you successfully change your domicile to Florida, you may still be subject to New Jersey estate taxes (if it is reinstituted) and inheritance taxes. Non-residents who own real estate or tangible personal property located within New Jersey are subject to the New Jersey inheritance tax.

 

Tangible personal property is subject to New Jersey estate tax (if it is reinstituted) and inheritance tax if it has a “permanent” situs in New Jersey. If tangible personal property can be transported back and forth, it may not be “permanently” located in New Jersey. If you own valuable artwork, jewelry, antiques, collectibles or other valuable tangible personal property, you should consider taking these items to Florida.


Things to do when you are ready to establish Florida as your domicile:

 

  1. File a Florida Declaration of Domicile in the office of the clerk of the circuit court for the county in Florida in which you reside. In the event you maintain a home in New Jersey, the sworn statement includes a declaration that your Florida home is your principal and predominant home, and that you intend to continue it permanently as such. (I can provide you with the form used for this purpose.)

  2. File an application for a homestead exemption on your Florida residence.

  3. Execute estate planning documents that reflect Florida as your place of residence.

  4. Transfer title to your automobiles.

  5. Obtain a Florida driver’s license.

  6. Change your passport address.

  7. Execute a post office change of address.

  8. Register to vote. And vote every opportunity you can… even off-year elections.

  9. Update official records (professional licenses, social security records, state licenses).

  10. Update all financial records (all financial accounts (bank, brokerage, checking etc.), credit cards, loans payable and loans receivable)

  11. Update membership records (political party, private clubs, alumni directory listings, charitable organizations, airline miles cards, religious organizations, etc.).

  12. Update employment records.

  13. Update medical and pharmacy records.

  14. Update all insurance records and premium notices (life, health, disability, medical, property & casualty, umbrella) and be sure that all subsequent personal applications for (life, health, disability, medical, property & casualty, umbrella) are on forms the provider/issuer requires of Florida residents.

  15. Update utility records (cable, internet, electric, ISP, telephone, cellphone, etc.).

  16.  Update residential leases.

  17. Anything else that evidences your bona fide intention to change your domicile from New Jersey to Florida.

Robert J. Adler,

Attorney at Law

ADLER & ADLER,PLLC

Wills, Trusts, Estates & Private Client Services

30 years of

EXPERIENCE

Office: 212-843-4059

Estate Attorney, Wills and Trusts

Direct: 646-946-8327

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New York, New York 10036

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