Each year it seems that more people move to Florida to enjoy their retirement in our warm weather and low tax rates. Many come from higher-tax states and may hope to be “let go” by their old home state. The question of domiciling has two prongs- based on the rules of the new state and the old state.
Thank you for reading this post, don't forget to subscribe!Florida has long been welcoming to new arrivals. In Florida there is the presumption that once you move here physically and intend it to be your residence, you ARE domiciled here as far as Florida is concerned. You are free to file for homestead (if you own real property) or obtain a beach parking permit without further proof. But your old state may need more convincing than your word for it. You may have to prove you are domiciled in Florida.
From a legal point of view, domicile and residence are different things. Florida’s domicile law was defined in this way by the Florida Fifth Circuit Court of Appeals: “Legal residence or ‘domicile’ is the place where a person has fixed an abode with the present intention of making it his or her permanent home. Once established, a domicile continues until it is superseded by a new one. A domicile is presumed to continue and the burden of proof ordinarily rests on the party asserting the abandonment of one domicile to demonstrate the acquisition of another.” Keveloh V. Carter, 699 So. 2d (Fla 5th DCA 1997.)
New York, which imposes both a state estate tax and state income tax, is known for vigorously auditing former New Yorkers who claim Florida as their new domicile. According to a March 2019 article in CNBC, New York State conducted 3000 such audits each year between the years 2010 and 2017. More than half of the former New Yorkers who were audited between 2015 and 2017 failed to prove their Florida domicile to the auditor’s satisfaction, and New York ended up recovering an average of $144,270 per audit. New York auditors are reputed to be relentless and thorough, monitoring social media posts, cell phone records, credit card bills and even dental and veterinary records to determine if a move to Florida is the real thing or merely a tax-dodge.
It is not just New York that monitors Florida transplants. In 2022, the Nebraska Supreme Court ruled against Duane and Phyllis Acklies, owners of a large trucking company. The Acklies moved to Florida in 2008, claiming they were no longer domiciled in Nebraska. It appeared that they had done what they could to support their claim: they changed their voter registrations, drivers licenses, purchased a home in Florida, applied for a homestead exemption. They even drafted a codicil to their Nebraska will that deleted all Nebraska references, replacing them with the word “Florida.” Notwithstanding all that, Nebraska auditors determined that the Acklies still used their Nebraska home as a base when they traveled, spent more time there than in Florida; kept some vehicles registered in Nebraska; maintained a golf membership there; and made political contributions in Nebraska. The Acklies had to pay Nebraska income taxes for the years 2020 to 2014.
What steps can you take to prove that Florida is your true domicile? Some steps are obvious. Others may not seem so but can be important nonetheless.
- Create new estate planning documents that are consistent with Florida law. These documents include your will, trust, power of attorney and advance directive for health care
- Register to vote in Florida
- Purchase a home in Florida or rent one. If you purchase one, apply for homestead exemption
- Open bank accounts in Florida
- Move your safe deposit box to a Florida bank
- Change your address on your credit card accounts
- Change your address on insurance policies
- Change your address on all documents
- Join organizations and religious organizations based in Florida
- Observe the 183 day rule: You must spend the majority of your time in Florida-meaning 183 days or more. Be sure to keep a log. And remember: New York considers a travel day to or from New York to be a New York day, not a Florida day
- Register all your vehicles in Florida
- Obtain a Florida drivers license
- Retain lawyers and accountants based on Florida
- Consult Florida doctors and dentists. Auditors may understand that you are seeking medical attention out of Florida, but traveling out of state for dental visits could be a red flag
- Get a library card for the library system in your Florida community
- Use your Florida address on all legal papers, including on your tax returns
- Auditors know that you keep with you your most precious belongings. So if you have a pet, be sure you use a veterinarian in Florida
- In additions to taking these steps in Florida, you should also take affirmative steps to cancel your ties to your former state. Cancel memberships, let the supervisor of elections know you are no longer voting in that state, etc.
- File a Declaration of Domicile in Florida. You may complete a sworn affidavit in the Circuit Court in which you state your intention to become a Florida resident. This is not a requirement to prove your Florida domicile, nor is it sufficient in and of itself, but it can be helpful
- Above all, be honest. Become a Floridian and don’t attempt a sham residency for tax purposes. You will likely be caught at some point