CIBC.com Our Locations Contact Us Form ADV/CRS Sign On Navigation About Us People Capabilities Insights Blog Choosing your state of residency - part 1 Cookie notice CIBC uses cookies to understand how you use our website and to improve your experience. This includes personalizing CIBC content on our mobile apps, our website and third-party sites and apps. To learn more about how we do this, go to Manage my advertising preferences. Close CIBC Private Wealth Management Blog Choosing your state of residency - part 1 Elizabeth Nichols October 23, 2021 Moving to a new state? This is the first blog in a two-part series that focuses on the impact of choosing your state of residency Read part 2: Choosing your state of residency: understanding community property and separate property Three considerations for establishing your new domicile There are many factors that prompt people to move to a different state—for example, a more temperate climate or a desire to be closer to their families. If you add in a friendlier tax environment—meaning no, or reduced, income tax and/or state estate tax—the pull to move to that new state may be even stronger. If you are moving from a higher-tax state to a lower-tax state, the state from which you are departing may not be eager to let you go. Because availing yourself of your new state’s tax benefits can be complicated, you should work closely with your attorney or tax advisor to be certain that you have effectively changed your domicile to your new state. Peter Reynolds, CPA, managing partner at Pivot CPAs, explains the considerations below. 1. Domicile vs. residency When seeking to change your tax home, it is necessary to distinguish between “domicile” and “residence.” As a person’s domicile and residence are usually the same place, the terms are frequently used interchangeably, but there are differences that must be considered. “Residence” means simply living in a particular locality, but “domicile” means living in that locality with the intent to make it your fixed and permanent home. A person may have more than one residence but can only have one domicile at a time. 2. Factors that may determine domicile Although domicile is said to be a matter of the mind or a matter of intention, certain facts and circumstances are often examined when determining which state is a person’s domicile. Below is a list of some of the considerations that may help determine which state is your domicile: Why and when did you acquire your home in your new state? How much time do you spend there? Did you retain a home in your previous state? What are the comparative sizes and values of each home and the furnishings therein? Where do you work? Where is your business or job actually located? Do you belong to any professional or trade organizations in your new state? Where does your family visit you? Where are your friends and other social contacts located? Where are you registered to vote? Where are your automobiles registered? Which state issued your driver’s license? Where are your banking transactions conducted? Where do you file your tax returns? Where are your advisors and health care professionals? Where are the social and/or religious organizations to which you belong located? Do you qualify for a homestead exemption in any state? What addresses were listed on any government forms? Where is your mail sent? 3. Changing domicile to your new state It is well settled that the burden of establishing domicile is upon the party who asserts it. You might find yourself in the position of asserting domicile if your prior state wishes to tax you. In order to support a change of domicile to your new state, you should consider taking the following steps (among others): File a Declaration of Domicile, if available in your new state File as a nonresident for other state income tax returns Move some bank accounts and safe deposit boxes to your new state Notify post office, banks, advisors and insurance companies of your new primary residence Use your new address in legal documents and applications Register your automobile in your new state and obtain a resident driver’s license Claim the homestead exemption under your new state’s property tax statutes, if available Become socially active in your new state Change your status in membership clubs in any other state from resident to nonresident and pay dues accordingly Move your tangible property to your new home There are many reasons you may want to move your home. If one of those reasons is to take advantage of friendly state tax laws, careful documentation can be a key ingredient to success. For more information on establishing domicile, visit our Choosing Your State of Residency resource page. Elizabeth Nichols is a senior wealth strategist in CIBC Private Wealth’s Houston office, with more than 25 years of industry experience. In this role, she assists high net worth clients and their advisors develop and implement comprehensive estate plans. Explore Categories or Authors WEALTH STRATEGIES CHOOSING YOUR STATE OF RESIDENCY - PART 2 Elizabeth Nichols Trying to understand community property and separate property? WEALTH STRATEGIES AN UPDATE ON POSSIBLE TAX CHANGES Theresa Marx Summarizing certain elements of proposed legislation. WEALTH STRATEGIES BENEFITS OF A DELAWARE TRUST FOR YOUR PRIVATELY HELD BUSINESS Halsey Schreier Did you know that a Delaware trust can offer several advantages for business owners? 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