RECENT COURT DECISION DRAWS ATTENTION TO DOMICILE PLANNING FOR ESTATE TAX PURPOSES  

For those who split their time between Connecticut and another state, a recent Connecticut court case offers a cautionary tale. Changing a driver’s license and limiting one’s time in Connecticut to less than 6 months per year may not be enough to anchor one’s residency in another state for estate tax purposes.

Consider Leslie B. Daniels, Executor of Estate of Jack Anderson v. Commissioner of Revenue Services. Mr. Anderson was a Connecticut resident from 1957 to 1970. He relocated to Tennessee in 1970, but years later, after a financial windfall in the health care industry, he began dividing his time between Connecticut, Florida and Arizona.

At his death in 2015, Mr. Anderson spent on average 5 ½ months per year in Connecticut, 3 ½ months in Florida, and the remainder of his time in Arizona. He had taken the usual administrative steps to establish his domicile in Florida, including changing his driver’s license and voter registration.

The Connecticut Department of Revenue Services (DRS) was not persuaded that Mr. Anderson was a Florida resident and assessed an estate tax of $6 million. His executor appealed. The Daniels court found that: 

1. “… one-time, administrative tasks accomplished with little more than an afternoon’s or a day’s effort, [which] carry little practical significance in or impact on Mr. Anderson’s day-to-day life favor Florida;”
2. “… personal, social and property connections favor neither Connecticut nor Florida because Mr. Anderson maintained essentially equal connections in each state;”
3. “… time spent in each state favors Connecticut.”  

The court affirmed the $6 million estate tax and stated, “where Mr. Anderson chose to spend his time is a more persuasive indicator of Mr. Anderson’s intent, [and] prevent[s] the court from concluding [the DRS determination] was erroneous and unreasonable.”

The Daniels case has been appealed to a higher court. Until we have more clarity, individuals are taking a risk if they claim to be domiciled in another state but spend more time in Connecticut than in any other state. As demonstrated by the outcome of this case, administrative acts such as changing one’s driver’s license and voter registration to a different state most likely will not outweigh the (potentially determinative) factor of “time spent in Connecticut.” For more information, please contact Heather J. Lange (hlange@brodywilk.com), Isaac B. Ellman (iellman@brodywilk.com) or another BW attorney.