September 28, 2017. Courtesy of Patricia E. Malley, Esq., Greif & Litwak, P.C.
As summer winds down and winter draws near, many New England residents will soon travel to Florida to escape the unpredictable New England winter climate.
Warm weather is not the only benefit to residing in Florida. The State of Florida offers tax benefits as well. First, Florida has no state income tax. Thus, Social Security benefits and income from retirement accounts such as IRAs and 401(k)s are not taxed. Second, Florida has no estate tax so your Estate will not have to pay a tax to the State of Florida based on assets owned by you at the time of your death. If you live in Florida for a significant portion of the year (meaning more than one-half of the year), you may want to consider becoming a Florida domiciliary in order to take advantage of these tax benefits.
In order to properly change one’s domicile to Florida, it is first important to understand the difference between residence and domicile. An individual may have multiple residences in different states. However, an individual may only have one domicile, which is the residence the individual intends to make his or her permanent home.
So how does one change his or her domicile to Florida? Below is a list of factors that are demonstrative of an individual’s desire to change his or her residence from Massachusetts (or other State) with the intent to establish a Florida domicile:
Declaration of Domicile. The Florida form of Affidavit of Domicile must be signed and recorded in the Office of the Clerk of the Circuit Court in the county of your Florida residence.
Change Voting Registration. Notify the applicable Massachusetts City or Town office where your have resided and request that your name be removed from the voting list. Register to vote with the local Florida office of the Supervisor of Elections and vote in the next Florida sponsored election (whether state, local or federal).
Federal Income Tax Returns. Your federal income tax returns must reflect your Florida residence address and must be filed with the Internal Revenue Service Center in Atlanta, Georgia. Your tax return preparer must be notified of your change in domicile.
Massachusetts Income Tax Returns. A Massachusetts Nonresident Income Tax return will be required to be filed to report to Massachusetts any income which originates in Massachusetts (e.g. rental or business income from real estate or a business located in Massachusetts). If there is no Massachusetts source income, then a final Massachusetts resident income tax return must be filed for the year in which your domicile is changed.
Correspondence and Memberships. Correspondents, such as charitable and political organizations, should be informed of the Florida address change and instructed to direct future correspondence to your Florida home address. Also, request that your name be removed from official membership rolls of any religious or political organizations in Massachusetts and consider joining similar organizations in Florida.
Estate Plans. Execute new estate planning documents (or amendments thereto) reflecting your Florida domicile including a Will, Trust, Durable Power of Attorney, Designation of Health Care Surrogate (known as a Health Care Proxy in Massachusetts) and Living Will.
Driver’s License, Registration Tags and Insurance. Surrender your Massachusetts driver’s license and obtain a Florida driver’s license. Register your motor vehicle in Florida and be certain it carries a Florida issued license plate. Additionally, make certain that you have proper no-fault insurance coverage with a Florida licensed insurance agent.
Banking and Investment Matters. If you have a safe deposit box in Massachusetts, you should either close the box or remove the items and transfer them to a safe deposit box in Florida. Notify all investment brokers of your Florida address. If any broker has an office in Florida, you should consider transferring the account to the local Florida office. At a minimum, be certain that all account statements reflect your Florida address. Additionally, the principal checking account from which all bills are paid should be paid from a Florida-based bank checking account. Finally, have your social security check directly deposited into a Florida based bank account.
Homestead Exemption. Apply for a Homestead Exemption on your Florida residence by personally appearing at the Florida Property Appraiser’s Office for the county in which you reside.
Do Not Reside in Massachusetts for More Than 183 Days Per Year. Massachusetts has adopted a simple standard to determine residency based upon the time a person is physically present in The Commonwealth of Massachusetts. Under this standard, if you are physically in Massachusetts more than 183 days per year and maintain a permanent place of residence in Massachusetts, you will be considered a Massachusetts resident.
This is not intended to be an exhaustive list of steps which, if taken, will ensure tax treatment as a Florida resident. It is recommended that you contact an estate planning attorney to discuss the possible benefits of changing your domicile to Florida should you wish to do so.
If you have any questions, please contact one of the attorneys at the law firm of Greif & Litwak, P.C., 195 Worcester Street, Suite 301, Wellesley, MA 02481. Telephone: (781) 489-1040.
Email Patricia Malley, Esq. at Patricia@gltaxlaw.com.
Email Lawrence Litwak, Esq. at Larry@gltaxlaw.com.
Email Nikolaus Schuttauf, Esq. at Nik@gltaxlaw.com.
This information is provided for informational purposes only to third parties who may be interested in the subject matter. This material is not to be construed as legal or tax advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.