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The division and distribution of an intestate
estate is often controlled by the intestate laws of just one
state, because most people live and own property in the same state.
Although this is the most frequent scenario, there are also many
people who own property in multiple states and who have residences in
multiple states.
Two main factors will determine which state's intestacy
laws control the disposition of
a person's intestate estate: 1) The property classification, or
type, of each item that belongs to the estate, and 2) the state of the
person's domicile at the time of death.
Types of Property
There are generally three forms of property: Real estate,
intangible personal property, and tangible personal property.
Real estate is comprised of the ground, as well as all
property that is permanently attached to the ground, such as a house.
Intangible personal property is basically cash and items that represent cash, such
as stock certificates. Finally, all property that does not fall into either
of the previous two categories is generally classified as tangible personal
property.
In addition to common objects, such as clothing, household
appliances, and furniture, tangible personal property will also include
larger or more expensive items, such as all electronic equipment, jewelry,
artwork, and vehicles.
Domicile
A person's domicile is defined as the geographic location of his or
her permanent legal home; the place where you intend
you intend to use for an indefinite or
unlimited period, and
to which, when absent, you intend to
return. A determination of your domicile is mainly a matter of
your intention as indicated by your actions.
Although any person may have more than one
home or house, each person can have just one domicile. According
to the IRS, some of the common factors that can be used
to classify a place as a domicile, rather than a residence are:
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Where you pay state
income tax,
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Where you vote,
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Location of
property you own,
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Length of
residence, and
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Business and social
ties to the community.
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In addition to these factors, the IRS also provides the
following statement as guidance in determining a person's domicile:
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The amount of time
spent in one place does not always explain the difference
between home and domicile. A temporary home or residence may
continue for months or years while a domicile may be established
the first moment you occupy the property. |
Domicile and Property Type Example
Howard owns a
house and lives in Texas, where he works as an airline pilot.
Most of his jobs involve connecting flights in Chicago and he also
spends one or two nights in Miami each month while he is between
evening and morning flights. The airline maintains an apartment
for him in Miami where he moves some of his personal belongings, such
as clothing, a television, and a gaming system.
Finding that he spends so much time in
Illinois, Howard
opens a checking account with a local bank that has a branch in the
airport, mainly using it to take money from the ATM. Early in is
career Howard also purchased some vacant land in
Florida as an
investment, on the advice of a local friend.
Sometime later Howard retires, returns to his Texas
home, and begins traveling around the country. Although he never
returns to Illinois, Howard occasionally visits Florida and uses the
apartment rented by his former employer when it is available.
During this time, Howard also buys a house in
Hawaii
where he begins spending about seven months out of the year. He
continues to return and live in Texas at all other times.
Finally, five years into his retirement, Howard is vacationing in
California when he becomes ill and is admitted to the hospital for
treatment. Although he is immediately treated, Howard does not
become well enough to leave and ends up staying at the hospital for
thirteen months before his death.
Determining Domicile
In
determining how to distribute Howard's intestate estate, the first
factor is to establish the state he was domiciled in at the time of
his death. Howard owned property, resided in, or had business
ties with five states: California, Florida, Hawaii, Illinois, and
Texas. Of these five, it is clear that Howard never intended to
reside in Illinois or Florida, which allows them to be immediately be
eliminated as candidates for his domicile.
Although Howard died in California after living there
for more than one year, it is fairly certain that he did not intend to
live at the hospital for an indefinite length of time and would have
left as soon as he was discharged. By merely vacationing in
California, it can also be assumed that Howard was not intending to
permanently live there prior to his death. As his only
connection to the state was his vacation and medical treatment,
California's intestate laws will not control the disposition of any
intestate property.
Howard was also spending about seven months each year
at his house in Hawaii during the five years prior to his death.
Spending this length of time at real estate that he owned could
indicate that he was domiciled in Hawaii, but the length of time spent
at any one place is just one of many factors that establish a person's
domicile.
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Although he was spending more time in Hawaii during his
final years, Howard was also regularly returning to his house in
Texas. Even though he spent more time in Hawaii, Howard always
returned to the state of his previously established, long-standing
residence. The fact that Howard had maintained his Texas house
for many years before buying a house in Hawaii also makes it likely
that he had been paying state income taxes to Texas and maintained his
voter registration in that state.
As Howard continued to perform many of the activities
that are commonly associated with a place of permanent residence in
Texas, it will be established as the state where he was domiciled at
the time of death.
Controlling Intestate Laws
As
discussed above, Howard's intestate estate will generally consist of
three types of property: tangible personal property, intangible
personal property, and real estate.
It is important to note that some states do not
distinguish between "tangible" and "intangible" personal property, but
merely combine the two types into the category of "personal property."
As the controlling laws and ultimate disposition is the same, with or
without this distinction, a notation of these states will not be
useful.
Tangible Personal Property
As he maintained houses in Texas and Hawaii, Howard
will have tangible personal property at each state in the form of
household furnishings, personal possessions, and automobiles. He
also has personal property at the apartment his former employer rents
in Florida. (Although his Florida property would likely be
forgotten, assume that the gaming system is valuable to collectors and
known to belong to Howard.)
With his domicile established as Texas, the division
and disposition of all Howard's personal property will be controlled
by Texas intestate law even though it is located in three different
states.
Although this choice of laws may not seem to matter
much, suppose Howard is married with two children and his intestate
tangible personal property is valued at $300,000. Hawaii law would
grant his surviving spouse the first $200,000 of this property.
The laws of the controlling state, Texas, grants his surviving spouse
with one-third of the same property, or $100,000. In this instance,
Howard's surviving spouse receives $100,000 less of his intestate
personal property because of his domicile.
(See Also: How
are items of intestate personal property divided?)
Intangible Personal Property
Howard is likely to establish and maintain most of his
financial accounts through institutions near to his Texas home.
He may also have accounts with institutions that are headquartered in
other states, such as brokerage accounts, which were established by
means of telephone calls, paperwork delivered through the mail, or
online methods. All of these accounts will be controlled by
Texas intestate law, without any regard to the institution's location.
He also has the account that was opened while he was
personally present in Illinois. He only made deposits and
withdrawals while he was in Chicago. In fact, every transaction
with this account took place while Howard was physically present
within the state of Illinois. Despite these factors, the money
in this account is controlled by Texas intestate laws because it is
intangible personal property subject to the control of Howard's
personal representative.
Real Estate
Howard currently owns real estate in Texas, Hawaii, and
Florida. Unlike the different types of personal property, real
estate is controlled by the state of it geographic location. The
individual laws of each state will be applied to the real estate that
is located in within each state's borders.
Although Howard's personal representative will most
likely be someone from Texas, he or she will be required to hire and
work with professionals from Texas, Hawaii, and Florida in order to
properly settle his estate.
If the property must be sold, it will be necessary to
engage real estate agents from Texas, Florida, and Hawaii. It
will also be necessary to engage three separate attorneys, one from
each state. The entire body of intestacy laws that are followed
by each individual American state are different from those of every
other state.
Each state's courts also require specific documents to
record the taxation and transfer of estate property. Aside from
individuals who are personally handling their own matters, state
courts also prohibit anyone other than a properly licensed attorney
from practicing within its courts. This will require the
personal representative to either personally appear at each state when
legal actions are necessary or to hire an attorney.
(See Also:
How is real estate divided
among multiple heirs?)
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