Home is where the heart is, right? Unfortunately, the matter is not quite that simple when it comes to international estate planning. Establishing where you home – referred to officially as your domicile by attorneys and the government – is located can have important consequences when it comes to estate planning, taxation, divorce, and inheritance. This is the case whether you spend time in more than one state or more than one country.
Here’s one illustration of how domicile can affect your life if you spend significant amounts of time in more than one country: If you are a non-citizen who splits time between a flat in London and a house in California, you could either receive a $60,000 estate tax exemption or a $3.5 million estate tax exemption depending on whether you qualify for a “domicile” or “non-domicile” exemption.
Determining Your Domicile
So, how do you know where your domicile is located? It is not as easy as stating it in paperwork or checking a box when you fill out tax forms. It is also not an entirely back-and-white issue: your domicile can depend on a large number of factors, and often your domicile will be determined on an individual, case-by-case basis.
Legally, domicile is defined as the place that you reside permanently: the place that you intend to return to eventually (if you are currently living somewhere else) and the place that you wish to remain indefinitely once you are there. However, for many families who have multiple residences and split their time somewhat evenly between homes, establishing domicile can be difficult. The government may use the following factors to find an answer:
- What is your visa status?
- Where do you spend the most time out of the year?
- What is the value of your property in each location?
- Where do you do business?
- Where are you registered to vote?
- Where are your vehicles registered?
- Where are you active in the community?
- Where do you file your taxes?
- Where do your pets live?
- Where do you intend to be buried?
Since where your domicile is located can have a huge affect on how you are taxed, taking any extra precaution to establish your domicile is recommended. Start by making certain that your estate planning documents, such as your will, clearly state your domicile.
California Estate Planning for International Families
If you have property abroad, live abroad for a significant part of the year, or are married to an non-resident, you may wish to take extra care when planning your estate. At The Law Office of Janet Brewer, we have extensive experience working with international families and couples. Call us today to make certain your estate is protected and to minimize tax penalities: (650) 325-8276. Or, get started right here at this website.