Individuals usually choose to become Floridians to take advantage of Florida’s favorable asset protection policies or to remove themselves from income or estate tax liability in their current state of residency. To avoid taxation in the Commonwealth of Massachusetts, it is important that you are not deemed to be a resident of Massachusetts nor domiciled in Massachusetts. While the determining requirements are similar in both Florida and Massachusetts, the tests to remove yourself from taxation in Massachusetts generally involve time requirements. Florida does not impose any time requirements to obtain asset protection.
Residence in Massachusetts
Massachusetts will tax a person as a full-time legal resident if they (a) are either domiciled in the Commonwealth or maintain a permanent place of abode in Massachusetts and (b) spend more than 183 days (including partial days) per year in Massachusetts. For Massachusetts taxation, your legal residence is considered to be where you maintain your most important family, social, economic, political and religious ties. This will depend on all of the facts and circumstances of each individual case. Also, you cannot choose to make your home one place for general living purposes and another for tax purposes.
Therefore, you may be subject to taxation in Massachusetts as a full time resident if you have a residence in Massachusetts while at the same time you have a residence(s) in other states, and even though you may have your true home (domicile) elsewhere. While you may have multiple residences at one time, you may have only one domicile at a time.
Domicile in Massachusetts
If you were at any time a Massachusetts domiciliary, but now maintain a primary home elsewhere, you may still be subject to Massachusetts taxation as a full-time resident of the Commonwealth even if you spend less than 183 days in Massachusetts. This is because you may only have a single domicile at any time and a new domicile may only be acquired by; (a) abandoning your current domicile; (b) establishing a new residence in a new place; and (c) intending to make the new residence your home permanently or for an indefinite time, with no certain present intention to return to your previous home. This can be a very tough burden and proving that a taxpayer has changed their domicile lies with the party asserting the change.
Therefore, a current domiciliary of Massachusetts who has a principal residence in Massachusetts and wishes to avoid taxation in the Commonwealth must take numerous steps to establish their new domicile in Florida. This involves establishing a new residency, removing yourself from your current domicile in Massachusetts, and then avoiding spending more than 183 days per year in the Commonwealth.
Practical Mechanics to Change Domicile from Massachusetts to Florida
Where your domicile is located is technically a subjective question. It is normally considered to be the place one resides with the intent to stay permanently without an intent to return to their prior residence.
A current Massachusetts domiciliary cannot change their domicile by taking a temporary or longer than expected absence from Massachusetts. You must not intend to return. To change your domicile, you must have declared your intent to leave the Commonwealth and taken steps to do so.
Massachusetts will examine your declaration of intent very closely and you bear the burden of proving that fact. Therefore, to avoid taxation, you must change your domicile as well as not be a resident in Massachusetts for 183 days per year.
The factors used to determine your subjective intent to be a domiciliary usually include whether:
- You have purchased or leased a new home or an apartment in the new location.
- You have moved personal property including important keepsakes such as photos to the new location.
- You have permanent employment in the new location.
- You canceled Massachusetts bank accounts and opened new accounts in the new location.
- You sold real property in Massachusetts or canceled leases.
- You issued address change notices.
- You changed voter registration.
- You obtained a driver’s license and automobile registration in the new location.
- You changed membership in churches, clubs, and community involvement.
If Changing Domicile from Massachusetts, Be Informed of What May Be Examined
In examining a claim for a change of domicile, the Commonwealth of Massachusetts can be aggressive and may choose to examine the following:
- Any different addresses you had at any point during the past 5 years
- When in Massachusetts, where you live and for how many months per year
- When in the state you claimed legal residence in, where you live and for how many months per year
- Property owned in Massachusetts
- Property owned in other states
- Dates physically present in Massachusetts over the past 5 years
- Dates physically present in other states over the past 5 years
- Part of the year you expect to be in Massachusetts in future years
- Part of the year you expect to be in other states in future years
- Years you’ve been eligible to vote in Massachusetts
- Years you’ve been eligible to vote in other states
- Years you’ve been assessed real estate tax in Massachusetts
- Organizations in Massachusetts (and in other states) that are considered:
- Fraternal organizations
- Bank accounts and safe deposit boxes, noting location and dates opened/closed
- Automobiles owned and where registered in the past 5 years
- Address listed on passport if obtained within the past 5 years
- Where any dependents attend school
- Your cell phone records, toll pass /EZ pass usages and credit card charges
Actions to Take to Claim Residency or Domicile in Florida
There are several actions a person might take to help establish their claim for residency / domicile in Florida such as:
- File a Florida “Declaration of Domicile” with the clerk of circuit court in the Florida county where you live. Each county generally makes the form available on its website. Additionally, it is recommended that you mail a copy of the declaration to the tax department in your former state.
- If you own a home in Florida, apply for the state’s Homestead Property Tax Exemption. Not only could your home’s taxable value be reduced by as much as $50,000, but it’s further evidence of your status as a Florida resident.
- Execute a new Will.
- Maintain a detailed log of where you are; travel itineraries/receipts, etc. This information would be used as evidence to support where you have spent your time. You must spend less than 183 days per year in your former state to be considered a “non-resident”.
- Consider when and where your primary credit cards are being used. Credit card charges are prima facie evidence of where you have been, when and for how long.
- Declare Florida as your domicile and the situs for all trusts in all estate planning documents (e.g., wills, trusts, powers of attorney, advanced medical directives). A visit to an attorney licensed in Florida to make sure your documents conform to current laws is also advisable.
- Establish yourself with a local bank or transfer your banking relationship to a major bank with a local branch.
- Update your mailing addresses on all applicable services and subscriptions (for example, newspapers and magazines).
- Travel: Establish your new residence as your “home-base” when traveling; leave and return from your Florida residence. If you depart from or arrive in your taxable state, then the days spent traveling could be counted as time spent there.
Requirements for Asset Protection in Florida
There are no set Florida residency requirements to become a Florida resident for asset protect purposes. Whether or not you qualify as a permanent Florida resident depends on whether your circumstances and your actions demonstrate your intent to establish a primary place of residence in Florida.
There is no strictly defined waiting period to establish Florida residency for asset protection purposes. As soon as you form the intent to make Florida your primary home, you are a Florida resident, and you are entitled to Florida’s asset protection benefits. Courts consider all relevant facts and circumstances indicative of a person’s ties to Florida. Florida defines a permanent residence as “that place where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning.” You may legally become a Florida resident and protect money invested in a new Florida homestead property even after a money judgment is entered. There are no civil or criminal penalties for moving to Florida after a creditor files a lawsuit. However, a possible complication exists if another state’s court has issued an injunction against transfer of assets.
The rules are different for bankruptcy, however. Bankruptcy law imposes a two-year waiting period before a debtor may claim Florida’s exemptions in bankruptcy court.
If you have questions about claiming residency or domicile with respect to the Commonwealth of Massachusetts and Florida, please contact the authors of this article, Robert W. Meshel or Marjory Selig. As experienced attorneys in Wilchins Cosentino & Novins’ Private Client Services practice, they focus on asset protection, trust and estate planning, and fiduciary services for individuals and closely held businesses.
This article is not legal advice and should not be taken as such or relied upon as legal advice.