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Each year, clients evaluate whether they would be better served to move their legal domicile to Florida. Many clients are drawn to Florida not just for the sun and sand, but also for the favorable tax rules and other things that Florida has to offer.
Florida’s tax system is very appealing to those who have earned their living in tax-heavier states. When they reach a stage in life where they will be potentially retiring and living from their saved and invested assets, they want to make their incomes go further so they have a more comfortable and secure retirement. Florida’s low-tax environment makes that possible. While many states around the country impose an income tax on their residents, Florida does not. Florida also does not impose state inheritance or estate taxes. Not only is Florida a relatively low-tax jurisdiction, but it appears likely to stay that way. In 2018, Florida’s voters approved an amendment to the state Constitution requiring a supermajority of both houses of the Florida legislature to pass a tax increase.
Bearing all this in mind, if you did decide to establish residency in Florida, what steps should you take to do so? The question of a person’s legal domicile is one of where a person intends to make his or her legal residence, and that intent should be borne out by evidence showing that the state of claimed domicile is truly the “home base” of a person. So, for example, if you were to purchase a home in Florida and claim it as your domicile, how much time do you spend there? Have you claimed your homestead exemption in Florida and rescinded your Personal Residence Exemption in Michigan? Where do you vote? Where are your cars registered? There is a lot which can go into this analysis, and the more you truly establish yourself with Florida as your home base, the clearer it will be that Florida is your home.
I’ve created a chart below with several different data points to think about when establishing a Florida domicile. Please keep in mind that the chart below is not an exhaustive list, and each situation is different. If you have questions regarding your specific situation, you should seek further advice.
ESTABLISHING FLORIDA DOMICILE
Establish a “home” in Florida. Execute a lease, or purchase a home or condominium.
- Make sure you are spending a sufficient amount of time at your Florida home. Generally, you should be residing in your Florida home more than half the year.
- File a Declaration of Domicile with the county where you will reside.
- If you purchased a home or condo, file documents with the local property appraiser to obtain the homestead tax exemption on your home.
- Update your mailing address and receive your mail at your Florida address.
Identify yourself as a Florida domiciliary
- Obtain a Florida driver’s license.
- Re-register automobiles, boats, motorcycles, motor homes, etc. in Florida.
- Register to vote in Florida.
- Update your passport to reflect your Florida address.
Establish roots for financial well-being in Florida
- Secure employment in Florida or, if retired, notify all investment brokers, life insurance companies, trustees, etc. of your new domicile.
- Open a bank account in Florida and re-route all direct deposits and debits to go through that account.
- Move valuables to a Florida safe deposit box.
- Notify Social Security, Medicare, etc. of your new address.
Establish professional and social relationships in Florida
- Build relationships with professionals in Florida—doctors, veterinarians, dentists, CPAs, etc.
- Join clubs or social groups in Florida.
- Join a religious congregation or organization in Florida.
Update personal legal documents to reflect Florida residence
- Sign new Florida estate planning documents: a Will, Revocable Trust, Durable Power of Attorney, Living Will, Designation of Healthcare Surrogate and Designation of Pre-Need Guardian.
- Discuss with your CPA about filing a final return in your previous state to note when you ceased being a domiciliary of a tax state and made Florida your home.
- Keep good records of when you are in Florida vs. when in other state(s). Your records should reflect that you have established a new home in Florida.
Questions? Contact Teresa Rajala at email@example.com or call 269.226.2978
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