Can I Be a Resident but Domiciled Elsewhere

Lillian discovered a handwritten codicil to her mother’s trust tucked inside a dusty photo album, attempting to redirect a significant portion of the estate to a new caregiver. Unfortunately, the codicil lacked proper witness signatures, rendering it legally unenforceable. The ensuing legal battle, attempting to prove the mother’s intent, cost Lillian’s family over $50,000 in attorney’s fees and created lasting rifts among siblings. A properly executed trust, with clear succession planning, could have avoided this heartache entirely.

The question of residency versus domicile is one I address frequently with clients, particularly those with ties to multiple states or who have recently moved. While often used interchangeably, these terms have distinct legal meanings with significant implications for estate planning, income tax, and asset protection. Many believe simply spending less than 183 days in California automatically terminates residency; this is a dangerous misconception. The Franchise Tax Board (FTB) doesn’t rely on a simple day count. They employ the “Closest Connection” test, evaluating 19 factors like your primary doctor, social ties, and where you maintain your driver’s license to determine your domicile.

A person can certainly be a “resident” in a state without being “domiciled” there. Residency, for most purposes, simply means you are physically present in a state for a certain period. Domicile, however, is far more comprehensive. It’s your true, fixed, and permanent home – the place you intend to return to, even if you are currently living elsewhere. Think of it as your legal home base. You can only have one domicile at a time. Establishing domicile involves demonstrating an intent to remain indefinitely, supported by physical presence and affirmative actions.

For example, a client might maintain a home in Arizona, where they spend the majority of their time, and be considered a resident of California because they continue to conduct business and have significant financial ties here. However, their domicile would likely be Arizona if their intent is to make that their permanent home. This distinction is critical when considering the impact of the One Big Beautiful Bill Act (OBBBA) permanent exemption. While the 2026 ‘Sunset’ was averted by the OBBBA, which permanently increased the Federal Estate Tax Exemption to $15 million per person effective Jan 1, 2026, your domicile will dictate which state’s estate tax laws apply to your assets, even if you merely reside in another.

As an attorney and CPA with over 35 years of experience, I’ve seen firsthand how these nuances impact clients’ estate tax liabilities. My background as a CPA allows me to proactively address the ‘step-up in basis’—the increase in the value of inherited assets to their fair market value at the time of death—and minimize potential capital gains taxes. Accurate valuation is key, and a thorough understanding of domicile is essential to ensure assets are properly titled and managed. Proper planning can significantly reduce estate tax burdens, but it requires a deep dive into your individual circumstances.

Let’s consider real estate. If a client owns a California home and passes away, the estate may be able to avoid formal probate using a simplified process. For deaths on or after April 1, 2025, a primary residence valued up to $750,000 qualifies for a ‘Petition for Succession’ under AB 2016 (Probate Code § 13151). However, it’s crucial to distinguish this “Petition” – which requires a Judge’s Order – from the Small Estate Affidavit. The Small Estate Affidavit is strictly for real property under $69,625, typically used for timeshares or vacant land. Furthermore, to qualify for the AB 2016 process, the decedent’s other non-real estate assets must typically remain below the separate $208,850 Small Estate limit. It’s a complex interplay of rules that demands careful analysis.

Furthermore, if you’re attempting to shield assets through a Limited Liability Company (LLC), simply relocating yourself doesn’t automatically protect those assets. 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. Moving to Nevada won’t provide the desired protection if your investors remain in California.

During a tax audit, the FTB will rigorously examine your claims of domicile. They 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. It’s not enough to simply state a new domicile; you must demonstrate it through concrete evidence.

• Residency: Physical presence in a state for a certain period.
• Domicile: Your true, fixed, and permanent home; where you intend to return.
• FTB Test: California utilizes the “Closest Connection” test, evaluating 19 factors to determine domicile.

What does a California probate court look for when interpreting testamentary intent?

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.

To ensure the will functions as intended, the executor must understand their executor duties, while the family should be prepared for the court supervision required to enforce the document.

For California residents, understanding how intent, authority, and compliance interact is one of the most effective ways to protect family harmony and estate integrity. A will that anticipates probate scrutiny is far more likely to be honored as written and far less likely to become the source of unnecessary conflict.

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 permanent federal estate tax exemption of $15 million per person ($30 million for couples), effective Jan 1, 2026.
• 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.