This article is the final installment of a three-part series that examines the benefits of being domiciled in Florida. The first installment explored the tax benefits of being domiciled in Florida. The second installment covered how to effectively cut your ties with Ohio to avoid the Ohio income tax. This installment will discuss the steps you should take to establish your domicile in Florida.
In my previous article, I examined the steps a person must take to effectively minimize his or her contacts with Ohio to avoid paying Ohio income tax. In this article, I will discuss the steps a person must take to establish his or her domicile in Florida. At the outset, it is important to note for most of our clients that establishing their domicile in Florida has two major benefits: real property tax savings and creditor protection for your residence. Apart from providing these benefits, Florida for the most part has no interest in determining whether an individual’s domicile is Florida as it does not assess personal state income tax.
Unlike states such as Ohio, Florida has no specific residency requirements or “bright-line” tests to determine residency. Instead, Florida uses a “facts and circumstances” test to determine if an individual is domiciled in Florida. To establish your domicile in Florida, you must intend to make Florida your permanent home. As a person’s intent is often difficult to prove, Florida will look at what objective steps a person has actually taken to establish residency in Florida. Put differently, actions speak louder than words and Florida will look at a person’s actions to determine intent.
Set forth below is a checklist of the steps to take to establish your domicile in Florida. Several of these items are “must do” actions to establish your domicile. The rest of the items are “should do” actions. The more of these items that you do, the stronger your position that you are domiciled in Florida.
- Own a residence in Florida.
- File a Declaration of Domicile with the clerk of Circuit Court in the County where you reside.
- Apply for the Homestead property tax exemption.
- Register to vote in Florida (do not vote in your previous state once it is no longer your primary residence).
- Obtain a Florida driver’s license and surrender your driver’s license from your previous State.
- Update your passport to use your Florida address.
- Be in Florida for more than half of the year.
- Register your vehicles in Florida.
- File your federal income tax return using your Florida address.
- If you have income sourced in another state, file a nonresident income tax return in such state for that income.
- Notify the Social Security Administration of your new Florida address.
- Update your estate planning documents to recite you live in Florida and to conform to Florida law.
- Change your religious affiliations to Florida.
- Join social organization and clubs in Florida and either discontinue or go on nonresident membership status for such organization and clubs outside of Florida.
- Open bank accounts and financial accounts in Florida.
Challenges to a person’s Florida domicile typically arise in a couple of situations. The Florida real property taxing authorities may from time to time investigate whether an individual who applied for and is receiving the Homestead Tax Exemption does in fact qualify for the Exemption. These inquires often arise after several years of receiving the tax benefits. If the taxing authorities discover information suggesting that a person is not domiciled in Florida, they may decide to retroactively undo the Exemption and assert taxes, interest and penalties. Another situation is where a third-party creditor is seeking to assert that a debtor is not domiciled in Florida and as such the debtor’s residence is not protected.
My goal in writing this three-part series is to provide you with some background on the benefits of becoming domiciled in Florida and the steps you must take in both Ohio and Florida to do so. As everyone’s circumstances are different, these articles are intended to provide a general overview but are not intended as legal advice. We encourage anyone thinking about establishing domicile in Florida to consult with an advisor.
We invite you to read other articles in this Estate Planning Series:
- Establishing a Domicile in Florida:
- Estate and Gift Tax Reform:
- Part 1: The Proposals for Estate and Gift Tax Reform Have Begun: Analysis and Considerations Regarding Lower Exemption Amounts
- Part 2: The Proposals for Estate and Gift Tax Reform Have Begun: Analysis and Considerations Regarding Grantor Trusts
- Part 3: The Proposals for Estate and Gift Tax Reform Have Begun: Analysis and Considerations Regarding Annual Gift Tax Exclusion
- Undue Influence:
This article provides an overview and summary of the matters described therein. It is not intended to be and should not be construed as legal advice on the particular subject.