There are a number of reasons why individuals choose to move to Florida during their retirement or split their time between Connecticut and Florida. Not only does this living arrangement allow an individual to avoid cold and snowy winters in Connecticut but Florida’s lower cost of living enables individuals to stretch their retirement dollars. Florida is considered to be a tax friendly state as it does not have an income, gift or estate tax and it has favorable creditor protection laws (i.e., homestead).
In order to enjoy the legal benefits of being a Florida resident, an individual must change his or her domicile to Florida. Domicile is defined as the place where a person intends to return to when away and treats as his or her permanent home. While people may have multiple residences, only one state can be considered a person’s domicile. The state of domicile dictates where individuals pay state income, estate and gift taxes. Hence, establishing a new domicile is a prerequisite to enjoying Florida’s various legal and tax benefits.
When trying to establish a new domicile there are a number of factors that should be considered including: (1) location of the primary residence; (2) business connections; (3) time spent in the state; (4) location of personal items; (5) family and friend networks; and (6) abandonment of former domicile. The Connecticut Department of Revenue Service provides a checklist of items it considers when it determines whether a decedent was domiciled in Connecticut. A few indicators that suggest an individual’s domicile was changed to Florida include, but are not limited to, filing tax returns using a Florida address, executing new Florida estate planning documents, obtaining a Florida driver’s license, buying property in Florida, registering to vote in Florida, becoming active in the community, and changing motor vehicle registration. No one indicator will control the determination, so keeping meticulous records is imperative. This is especially true if an individual or family wishes to maintain a residence or other assets in their former home state.
Changing domicile can have major impact on one’s personal, professional and financial being, so it is important to consider all the implications, carefully. For more information, please contact Alyssa V. Sherriff (asherriff@brodywilk.com).