Can I Be a Resident but Domiciled Elsewhere

Barry received a frantic call last week. His mother, Eleanor, had passed away in Florida, but she still owned a home in Escondido. Barry had diligently updated her estate plan years ago, including a pour-over will and a carefully crafted codicil addressing the Florida property. Except… the codicil was misplaced during the move, and Barry couldn’t find it anywhere. Losing that single document could now cost him $30,000 – $40,000 in unnecessary probate fees, simply because a minor adjustment wasn’t legally formalized. It’s a heartbreaking example of how easily even a well-intentioned estate plan can unravel due to procedural errors.

As an Estate Planning Attorney and CPA with over 35 years of experience, I frequently encounter clients grappling with the complexities of residency and domicile, particularly when multiple states are involved. It’s a surprisingly nuanced area, and understanding the difference is crucial for proper estate planning and minimizing potential tax liabilities. Many people assume that simply spending less than 183 days in California does not automatically terminate residency; the FTB uses the ‘Closest Connection’ test (evaluating 19 factors like your primary doctor and social ties) to determine domicile.

What’s the Difference Between Residency and Domicile?

The terms “resident” and “domicile” are often used interchangeably, but legally, they mean very different things. Residency, in the simplest terms, is where you currently live. Domicile, however, is your true, fixed, permanent home – the place you intend to return to, even if you’re temporarily living elsewhere. Think of it as your anchor to a specific location. Establishing domicile determines which state’s laws govern your estate, and impacts everything from income tax to probate.

How Does This Impact My Estate Plan?

Your domicile dictates which state’s laws will primarily govern the distribution of your assets. While you can own property in multiple states, your domicile determines where your personal property is distributed and how your estate will be administered. This is especially important if you’ve moved from California but still maintain a residence here. A properly drafted estate plan must clearly reflect your domicile and address the potential probate implications in each state where you own property. For example, if you’ve established domicile in Florida but own a home in California valued under $750,000, you might be able to use the simplified Petition for Succession under AB 2016 (Probate Code § 13151) for that specific property, avoiding a full probate proceeding. However, to qualify, the decedent’s other non-real estate assets (cash, stocks, etc.) must typically remain below the separate $208,850 Small Estate limit. Conversely, if the California property is a timeshare or vacant land valued below $69,625, the Small Estate Affidavit process is applicable.

What About Taxes?

Domicile is paramount for tax purposes. Your domicile determines which state can tax your income and potentially impose an estate tax. As a CPA, I can tell you that maximizing the step-up in basis on appreciated assets is a significant benefit of careful estate planning, and this is directly linked to properly establishing and documenting your domicile. The 2026 ‘Sunset’ was averted by the One Big Beautiful Bill Act (OBBBA), which permanently increased the Federal Estate Tax Exemption to $15 million per person effective Jan 1, 2026. However, even with a high exemption, understanding the tax implications of your domicile is crucial. The FTB will scrutinize your residency, and auditors will use Form 4600 (Residency Questionnaire) to scrutinize your life, including the location of your dentist, the registration of your pets, and where you keep your safe deposit boxes.

What If I Own a Business?

If you’ve moved out of California but continue to operate a business here, it’s vital to understand how that impacts your tax obligations. Moving yourself doesn’t move your business income; under updated Regulation Section 25136-2 (effective Jan 1, 2026), California sources asset management fees based on the domicile of the underlying investors, not the fund itself. A change of domicile does not automatically exempt your business from California taxes. Proper structuring and documentation are essential to avoid unexpected liabilities.

How do probate courts in California evaluate intent when a will is challenged?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Controlling Legal Standards for Establishing Domicile and Residency

• Residency Guidelines: FTB Pub 1031 (Guidelines for Determining Resident Status)
  This is the primary resource for the “Closest Connection” test. In 2026, it details how the FTB evaluates 19 factors—including the location of your healthcare providers and social ties—to determine if your presence in the state is “permanent” or merely “transitory.”
• Voter Registration: California Secretary of State – Voter Registration
  Updating your voting address is a critical indicator of intent. For the June 2, 2026, Primary Election, the deadline to register online is May 18, 2026. This serves as a public declaration of your primary home.
• Federal Estate Tax: IRS Estate Tax Overview
  While domicile determines state tax, this resource outlines federal guidelines. It reflects the 2026 OBBBA update, which permanently set the federal estate tax exemption at $15 million per person ($30 million for couples), indexed for inflation.
• Proof of Residency: California DMV – REAL ID Checklist
  Since the federal enforcement deadline passed in 2025, a REAL ID is mandatory for domestic flights. This page lists the specific residency documents (e.g., utility bills, tax returns) that the state accepts as proof of a permanent California address.