Residence, or Domicile?
The following article, authored by Kirk, has been published in the Jan./Feb., 2013 issue of Escapee's Magazine.
For most Americans, there is never a question of residence or domicile because of the lifestyle they lead. If they move their homes they buy or rent a physical house and bring with them all of their daily activities. They shop in local stores, subscribe to the local newspaper, visit local doctors, keep their assets in local financial institutions, and become involved in local activities, leaving little doubt that they have only one physical home, residence, or domicile. It simply is never an issue. But for those who choose to become full-time RV’ers this can be less clear.
One of the advantages of the full-time lifestyle is our ability to choose any place to call home. Many full-timers choose a location more tax friendly than the place where they have lived for their working lives, while others may choose to keep the domicile which they have had for many years. Discussing the issue, we must first understand the difference between residency and domicile, as they are not synonyms.
Residency is actually as simple as the place where you live. Many people have more than one residence as they may spend time in several different locations in the course of a year. Each place that we stop for more than a few days is a residence. For a full-timer, there are usually many of these and they may be of very short duration. Care must be taken when staying for extended periods to avoid violation of local requirements related to establishment of domicile.
Domicile is an important legal term. Each person may have only one domicile at any time. “Legal residence" is often used in place of domicile. Domicile is the place where we pay taxes and conduct business. This is our true, fixed, and permanent abode and the place where, when absent from it, we intend to return. The establishment of a domicile requires meeting legal requirements of the new state and voiding of the domicile in the previous state. Within a single state the legalities of shifting locations are seldom a significant issue. There are a host of legal definitions for the term domicile, but in no case is there a law which clearly spells out exactly what constitutes domicile. It is the result of a combination of actions. It is nearly always the place where one is registered to vote, but that is only one factor. Some actions which may determine your domicile are registering motor vehicles, buying insurance of any type, maintaining a driving license, making financial transactions, service of legal documents, medical appointments, and maintaining an address.
While it is generally considered that vehicles should be registered in your place of domicile, that is not always true as the laws state that a vehicle should be registered and insured in the place where it is "garaged," or where kept when not actually in use on the roadways. That could be your physical home, but there may be those who own a vehicle at each of two different residences for use there, and which is left behind when residences change. In such case, the legal thing is to have each registered in the state where it remains. Vehicle insurance must be in the location where the vehicle is registered, for each vehicle owned. Boats have similar registration requirements.
Driving licenses are usually maintained in the state where one domiciles. You must meet the legal requirements of the state where you apply for a license and these are not always the same. For most people, driving licenses, vehicle registration and mail service are all in the same state because you need an address in order to receive renewals when due and to insure them. License and registration laws make no mention of domicile, but require a permanent address and can be a consideration determining it. Though no laws are violated in doing so, you may be questioned if license and registrations do not match addresses. While you are not required to receive mail at your domicile, it usually simplifies things if you do so.
Financial transactions are a consideration, but the law doesn’t state where they must be done. It is not uncommon for people to do business in more than one state and there is no legal issue in doing so, as long as you pay all taxes in the appropriate states. Direct deposits across state lines could create tax issues. If you hold paid positions while you travel, care must be taken to pay taxes to the proper state without creating a change of domicile. Good records are very important.
Most of us base the choice of domicile primarily upon things like state income taxes, registration fees and things which cost us money, but one should be very careful and make sure that other legal issues will not become a problem. A couple who choose to share RV travel, but are not married should understand common-law marriage. Also important are issues of common property or dower rights. Jury service should be considered, as should estate laws, medical directives, powers of attorney, living wills, revocable trusts, and any other legal issue that may apply to you. It is not possible to list every conceivable issue that should be considered but sound legal advice is important. Very seldom is there a legal challenge to the domicile chosen, but in the event there is, each and every transaction of business or legal activity could become evidence in a hearing. Generally, the more of your business which you transact in the location of the chosen domicile, the more secure yours will be. Typically, courts will rule that your domicile is inthe location where the most important or majority of business is transacted.The mobility which allows us this freedom to choose can invite a dispute.
The impact of domicile upon existing insurance policies should be examined. That is particularly true for health coverage or retiree benefits. In some cases state insurance pool availability could be important. Because each case is different you need to be very careful. Medicare is valid in all states but supplemental coverage and part D policies availability and cost vary by state. HMO policies may limit travel. Finding doctors and medical facilities that accept your insurance or which are “in network” should be considered.
The three most popular states for full-timers are Texas, Florida, and South Dakota. They share a lack of state income tax, no required period of presence in the state, relatively low cost to register and insure vehicles, and a willingness to accept mail service as your address. In addition, Texas is the home of Escapees and Florida is the home of the mail service from Good Sam. All three have a number of popular mail commercial services. No state is best or worst for everyone so choose carefully.
The actions of moving your vehicle & voter registrations, mail service and driving license are all relatively simple but the impact of domicile choice and its validity could be of critical importance.-