Does it really matter where a person lives? Of course it does. While a person may have multiple residences, a person has only one domicile. This is where the person lives most of the time, where they vote, where they file income tax returns, where they have their car registered, where they belong to more organizations and also get their primary and secondary medical and dental care.

The primary reason for determining residence is for taxes. This could be income taxes as well as estate taxes. As only eight states have a form of estate tax, most of which are in the northeast, there is an overwhelming reason to select a domicile where there is no estate tax. For instance, in Massachusetts, if a single person has greater than $2 Million, the excess of the $2 Million is taxed at a rate beginning at 7% and going as high as 16%. If this same person lived in Connecticut, they would have no estate tax on the first $15 Million, and if they lived in Florida or New Hampshire, there is no state estate tax at all.

In Massachusetts and Connecticut where the income tax rate is approximately 5% on most income, states such as New Hampshire and Florida have no income tax, so this is a significant benefit in paying no income or estate tax vs. paying a substantial amount in taxes. This is important for a person who has a fairly large portfolio of assets and derives unearned income as well as a person who is taking the required minimum distribution from their retirement plan where they will save by not paying any state income tax on those funds.

However, it is sometimes not so easy to determine a person’s domicile. Of course, if a person moves from one state to another and sells their home in the state that had higher taxes, this should not be an issue since there are no incidents of domicile once they move. There is an issue, however, if a person maintains two residences as to where their domicile is established. Again, living in one jurisdiction for at least six months is but one indication of where they intend to live on a permanent basis. They may spend summers at their beach house together with other vacations and weekends during the year, but if the days do not amount to more than 181 days, they may not qualify as domiciled residents of that jurisdiction. Many other factors need to be considered such as where they vote, where income is derived from, where income taxes are filed, where their doctors and dentists are located, where they belong to religious and fraternal organizations, where they volunteer their time, where family events are held, and where they really consider to be their “home”. Of course, there is no problem until there is an audit by the Department of Revenue as to either an income tax issue or when they pass away as to the estate tax issue. States are very aggressive in the quest to secure the maximum amount of taxes a person owes, and they therefore put the burden on the taxpayer to establish their residency status. Very often, this is somewhat of a gray area and all of the factors need to be reviewed, not merely how many days a person lives inside or outside the jurisdictions.

For example, a person may live in two different jurisdictions and maintain a car registration in both states, so the query is where do they spend more time. This becomes a factual basis, and the taxpayer is charged with the responsibility of proving their status, so very often, it is recommended that a client maintain records either electronically or on an annual written calendar where they are located throughout the year to conclusively establish your domicile, especially if they should pass away and are not available to testify or produce records. Naturally, the client does not wish to pay the maximum tax rates, so they are going to select the state with the lower tax rate, and they do need to take into consideration many other factors such as whether they are renting one of their homes when they are not living there since renting a property would not appear to suggest that is their domicile. A problematic area is when one spouse lives in one state and the other spouse declares domicile in another state, as it is then important to determine what income tax returns will be filed as residents or part-year residents and whether a client should be filing married filing separately or married filing jointly. Therefore, it is very important to be sure that the client’s accountant is aware of the situation so that the income and deductions may be reported properly in multiple jurisdictions on various income tax returns.

Many states are fairly sophisticated in determining domicile and now have access to many online records and may also subpoena records of the taxpayer. This includes voting records, where animals are licensed, where ATM’s are accessed, and where cell phones are being utilized. Some states have been successful in obtaining the records from the wireless phone companies to ascertain what days a person was in various jurisdictions by the towers where cell phones were being utilized.

In determining domicile, one must plan in advance and establish the checklist of items to consider in changing their domicile so that when the selection is made, it is going to be approved if and when tested.

Other considerations are filing homestead in one jurisdiction and releasing homestead in the other jurisdiction, changing estate planning documents to conform to the new state, considering any issues relative to closely-held businesses or business interests, and perhaps giving up board positions in one state and taking on positions in another state. The coordination of all issues should be made with the professionals assisting the client including their lawyer, accountant, financial advisor, and insurance agents. In some cases, pre-arranging funeral expenses should be considered. If taxes are going to be a major consideration, the i’s should be dotted and the t’s should be crossed so that there will not be any area for problems to be raised that will have to be resolved when a person passes away.

The information in this article was written for the Business West 2026 Senior Planning Guide, and authored by Attorney Hyman G. Darling from our Springfield office. Attorney Darling is licensed to practice law in Massachusetts and the U.S. District Court District of Massachusetts. He is an active member of the National Academy of Elder Law Attorneys and is a Certified Elder Law Attorney (CELA). Additionally, he is a member of the Special Needs Alliance and the Hampden County Bar Association.