Legally there is a significant difference between one’s “domicile” and one’s “residence.” You can have as many residences as you want, but you can have only one domicile. Your domicile is your legal home, which you treat as your fixed and permanent location. It’s your principal establishment. A residence is more of a transient concept; your temporary place of abode.
For instance, I have a lot of senior “snowbird” clients who “fly south for the winter”, meaning that they spend the winter months in Arizona or Florida to avoid the cold and snow up here in Colorado. They can designate their domicile as Colorado while they have a residence in Colorado and in Arizona or Florida.
“Who cares?” The various state agencies in charge of raising revenue care very much. Your domicile’s location will determine which state can tax your income and your estate when you pass away. If minimizing or eliminating such state taxes is important to you then you should make it clear to everyone that your domicile is in a low (or no) tax state.
Domicile is, to use a legal term, a “question of fact.” This means that you need to look at the facts of each case to make a determination. In the vast majority of cases, determining your domicile is very easy. But sometimes it’s not so easy.
How do you make sure that your domicile is crystal-clear to an objective observer? Keep in mind that if your domicile becomes a legal question then courts tend to look at the following facts: (1) residence at death, (2) your proclamation of domicile in your wills, trusts, deeds, etc. (3) ownership of real estate, (3) place of automobile registration, (4) place to which you return to from trips, (5) where you’re registered to vote, (6) the address you use in tax returns and whether you file them as a “resident” or “non-resident”, (7) locations of bank accounts and safe deposit boxes, (8) the location of your valuable personal property, (9) where your pets are kept, (10) membership in clubs and religious organizations, (11) location of volunteer activity, (12) location of political activity, (13) place of birth, and (14) local newspaper subscriptions.
If this is of concern to you then discuss this topic with your accountant and estate planning attorney.