WHERE DO YOU LIVE?

A Will is probated in the state and in the county where the decedent died “domiciled.” It has been said that a person can have many residences but only one domicile. In many instances, establishing domicile is a simple task. If a person has only one home when they pass away, that is where they died domiciled. But what about people who have more than one residence?

For those decedents who have two – or more – residences, domicile must be established from the facts and circumstances of their lives. When the residences are in two states, the choice of state where the person died domiciled could prove very important for purposes of state inheritance tax, as well as other aspects of estate administration.

If the decedent had two houses in New Jersey, where s/he were actually domiciled is not going to affect much with regard to her/his estate and probably no one would challenge – or care about – the county the executor chose to probate the Will. If a person passes away having lived their entire life in Monmouth County, their Will is probated in Freehold.

But what if the decedent owned a house in Monmouth County, New Jersey, and a house in Lee County, Florida? If the decedent died a domiciliary of New Jersey, her/his estate would be subject to New Jersey Inheritance Tax. Whereas if the person died a domiciliary of Florida – only the decedent’s real property (i.e., the house) the person owned in New Jersey would be subject to New Jersey Inheritance Tax. (In a previous article, I discussed New Jersey Inheritance Tax.) Florida does not have an inheritance tax.

Since a person can have many residences but only one domicile, a person’s domicile must be established. So, if the decedent had two residences and spent six months at one residence and six months at the other, which residence was the person’s domicile?

In order to establish domicile, you would look at the circumstances of the person’s life: where does their Will say they were domiciled?; where did they vote?; did they have a New Jersey or a Florida driver’s license?; did most of their immediate family reside in New Jersey or Florida? The decedent’s conduct in life would provide the greatest evidence of domicile.

In the past, some estates – thankfully, very few – have had tremendous problems with the issue of domicile. For instance, assume that the decedent had houses in two states and that both states have an inheritance tax. Let’s assume that the decedent had a house in New Jersey and in Pennsylvania.

A New Jersey court may decide that the decedent died domiciled in New Jersey and that the decedent’s estate is subject to New Jersey Inheritance Tax. A Pennsylvania court may decide that the decedent died domiciled in Pennsylvania and that the decedent’s estate is subject to Pennsylvania’s inheritance tax. Because the decision of the New Jersey court is not binding on the Pennsylvania court, and vice-versa, the decedent’s estate could end up paying two states’ inheritance tax.

As stated, this has happened in only rare instances, but it can happen. In most instances, once domicile is established, the decedent’s Will is probated in the state where they died domiciled and the inheritance tax, if any, is paid to that one state.