resident of New York?
We recently uncovered a very intriguing article at Investmentnews.com that talks about Joan Rivers, a superstar in her own right, who recently passed. It takes a look at her creative estate planning strategies. The opinion piece reflects on Joan’s decision to claim residency in one state while choosing to be based in another location. Ms. Rivers, who passed away because of medical procedure complications was 81 and according to the article had a will on file in NY dating back to 2011. The will indicates that Joan was a resident of New York, but that she declared California as an indefinite or permanent base. So there is some ambiguity in the legalese contained within the document, it seems.
Estate planning experts and attorneys would likely agree that celebrities often choose this bi-costal type course of action as a way to maximize tax efficiency. In Joan’s case there could be an issue of interpretation. Understanding state related estate tax laws is essential to safely implementing a bi-costal type of estate plan strategy. Rarely used by those who are not celebrities or famous public figures of note, the bi-costal angle to estate taxes has inherent complexities that are best addressed by a planning expert. With New York’s 16% estate tax, it is not surprising that those with homes in both California and New York would consider this creative option.
The estate tax benefits offered by the state of California can provide for an important tax break if the planning is done in a concise and legally safe and transparent manner. Albeit, each estate case is unique and different; meaning nothing is cast in stone. As a reminder the New York estate tax exemption is set to increase each year until 2019. The main objective of the recent changes to estate taxes in New York is to achieve parity with the federal estate tax exemption as adjusted for inflation. In California where Joan Rivers claimed domicile there has been no estate tax since as far back as 2005. In terms of estate planning established rules and accepted practices, only one state can be listed as a primary domicile. This is a key consideration for those who choose to reside in multiple locations.
Determining A Domicile
Also worth noting is that the probate process is less encumbering and less stringent in New York as compared to California. So there is clearly a give and take when determining a domicile for estate taxation purposes. In short, a domicile can only be one state - so choose wisely. Always avoid the temptation to list two states as a domicile. This is especially true in light of the fact that state taxing authorities tend to take notice of out-of-the-ordinary domiciling. Ms. Rivers’ case is unique and one that raises important questions. Estate planning in New York state requires careful and detailed analysis by an expert in the field. Estate planning in California requires the same level of professional focus.