2. Establishing domicile is all about the number of days you live in the new state. There is a common misconception that one can establish domicile simply by living in a new state for six months and a day. Each state has different rules, and the number of days you live in a state is just one of many factors a state may evaluate to determine residency.

Most states will look at the totality of your living situation, such as where your personal belongings are located , where you engage with civic and nonprofit organizations, where you attend a house of faith, even where your pet is located can determine whether you’ve truly changed domicile. In essence, there is no doing this “halfway.” When changing domicile, be prepared to commit and fully live your life in the new state or be prepared for the tax collector to come knocking.

3. Changing domicile only impacts income tax. This is another very common misconception. Many successful families choose to move to a state with low or no income tax. However, changing domicile can also have an impact on estate, gift, excise and, in limited cases, inheritance tax. Therefore, it is important to consider the full picture of your tax exposure when considering a change of domicile. 

A cautionary example: if you move to a new state with lower income tax, but it has an inheritance tax, and a family member passes away, you could wind up paying an inheritance tax on assets received.

4. All states basically follow the same rules. Nothing could be further from the truth. Each state has its own approach to determining domicile. And while some are more aggressive than others in confirming whether domicile has changed, the key is to understand the rules and expectations of both the state you are leaving and the state to which you are moving. For example, Florida requires a sworn affidavit and submission of two or more documents proving 12 months of physical presence with intent to remain.

5. They’ll never check to see if I’ve actually moved. Pinning your hopes on winning the “audit lottery” and hoping a state doesn’t investigate whether you’ve fully changed domicile is a mistake. States can and do check, particularly when they see a meaningful drop in tax revenue from HNW and UHNW taxpayers. Don’t risk an unpleasant audit experience. Assume that the states involved will seek proof of domicile from you and be prepared to provide that evidence. In Washington, for example, auditors analyze the length of time spent in a location, sites of personal and real property owned by the individual, place of business or employment, and, if there are children, the location of schools they attend. 

6. No need to update your digital footprint. Where we live is typically plastered across our digital footprint. It’s in our “about” profiles on LinkedIn, Facebook and numerous other social media and online platforms. It’s also usually clear in what we post online about our day-to-day lives. In other words, it’s not difficult for a state to check your online profiles and determine where you are spending your time. So, update your online presence accordingly and make sure what you share demonstrates where you truly live.

As you can see, successfully changing domicile demands careful planning, thorough documentation, and a genuine shift in where and how you live your life. As states become more vigilant in tracking and challenging residency claims, especially for high net worth individuals, relying on outdated assumptions or oversimplified strategies can result in costly consequences. 

By understanding the common misconceptions outlined above and working with experienced advisors, you can make a well-informed, defensible transition that aligns with both your personal goals and state requirements.