As you get older you start to understand the true value of the life you have led and its impact on your family. You may move to another state to be closer to a relative or you may simply choose to travel to see people and places and enjoy your years. As unfortunate as it may be to think about, at some point we all will die. While emotionally it will matter how and where you die, especially if arrangements need to be made to bring your body back to your final resting spot, legally, the only information that will truly matter will be where you called home. In other words, what state received taxes from your income every year?
Varying State Laws
Like many things that actually affect how we live our life, estate taxes and laws are decided by individual states, not the federal government. Yes, the federal government may take a fair share of money from your estate, but the bulk of your estate issues are settled on a state level. For instance, in Michigan, as many of us learned through the death of Prince, intestate estates are divided equally between half siblings and blood siblings. No differentiation is made between the two blood lines. In states like Florida, there are no estate taxes, no matter the size of the estate; yet states like New Jersey are amongst the highest in the nation for estate taxes and the lowest taxable threshold. While your loved one may have died in Minnesota, if they lived in Illinois, there may be a different set of laws that apply to their estate than if they had lived in Minnesota as well.
It would sure be wonderful if you could simply say to the government, “Well, Mom lived in Florida, so we will follow Florida’s laws.” Just like that, Florida becomes overly populated! Unfortunately, it does not work that way. You must prove a person lived in a state before you can take advantage of any estate tax laws that state may have. It is not enough for the person to have been to that state or even have an extended 6 month stay- that person must have set up a domicile in the state in which you are attempting to file estate taxes. For instance, the deceased must have owned or rented a home, had proof of utilities for that property, maintained tangible property in the state, and most importantly, paid taxes to the state while alive. For instance, a college student living in a dorm for a year in California who tragically died while at college did not necessarily have domicile in California, especially if she was from Connecticut and filed income taxes in Connecticut every year, including the year of her death. However, if she decided, after graduation, she was going to stay in California, rented a home, found employment, and filed income taxes in California prior to her death, then she may have domicile in California. Either way, it is up to an attorney to prove her domicile state in the event of her death if estate taxes are to be paid.
To learn more about the issues affecting where you live before you die and how to properly plan for your family in the event of your death, contact WL Brown Law Office at (612) 309-9184.