Why is “Domicile” Important?
It is remarkable how much money can be saved in choosing the best domicile for you. How does domicile effect and play into estate plans and estate planning? Anyone who owns real estate in two or more states and occupies the two places approximately 6 months out of each year should analyze for themselves which state is a better state to be domiciled in. When analyzing which state should be your domicile, we consider the following key areas:
1. Which state has more favorable real property taxes?
We always look at this in terms of . . . comparing each state as if it were your domicile. For instance, in Beaufort County, South Carolina, if your real estate is your primary residence, you will have less of a tax burden than, perhaps, your neighbor who may be domiciled in a different state.
2. Which state is less onerous in terms of taxation upon death.
Some states have an inheritance tax and also their own estate tax. South Carolina effectively has neither.
3. Which state has more favorable asset protection rules?
Here, we analyze client’s exposure and asset protection characteristics available in differing states.
It is remarkable how much money can be saved in choosing the best domicile for you. Most often, our clients determine South Carolina is the best domicile because (1) less property taxes, (2) no state estate taxes (effectively), (3) no inheritance taxes.
The moral of the story is domicile should be looked at closely in applicable cases. The savings that can be had in real property taxes can be substantial.
Mark F. Winn