New York Estate Planning & Elder Law Blog
Joan Rivers’ estate continues to be a topic of interest as it has been recently discovered that she reduced her estate tax burden by claiming residence in one state while actually living in another. Ms. Rivers’ died in September at the age of 81, and she had a will on file at the Surrogate’s Court in New York that was dated November 16, 2011. The will is of interest to estate planning attorneys and experts because of some of the wording regarding her place of residence.
Joan Rivers’ Will
The will on file states that Joan Rivers was a resident of New York state, but it also states that her state of domicile where she intended to stay “indefinitely and on a permanent basis” was California. Furthermore, her estate document contends that New York estate law will apply to the validity, interpretation, and administration of the will unless she died in California. If that was the case, California law would apply.
Generally speaking, a person can reside in multiple states but only be domiciled in one for estate planning purposes. The domiciled state is the one where the primary home is located, where there is intent to return, and where the main contacts of a person’s life can be found. The domiciled state remains constant even though a person may reside in many different places.
While it is not unusual for celebrities to be bi-coastal or have homes in multiple locations around the country, the distinction between Joan Rivers’ state of domicile and state of residence could make a big difference in terms of state estate taxes. It is also an estate planning strategy that is rarely seen in high-profile estate plans.
Estate Planning Considerations
New York increased its state estate tax exemption from $1 million to $2.062 million in April of this year. It will continue to increase every year until 2019 when it will be equal with the inflation-adjusted federal exemption level for estate taxes. The state estate tax level in New York is currently at 16%. However, in California where Ms. Rivers claimed to be domiciled, there has been no state estate tax since 2005. As a result, for people with homes in both states, there is an estate tax advantage to being in California.
However, there are benefits to considering residency in New York over California for the purposes of probating an estate. The biggest benefit is the respective states’ probate process. In New York, the process is simple and the court only gets involved when a person objects to the will. In California, the process can be much lengthier, complex, and have higher legal fees.
Choosing Your Domicile
Estate planning attorneys routinely run into the issue of choosing a domicile over a residence with clients who own properties in multiple states. Many clients choose to make their domicile Florida later in life because it is where they spend their winters and where there is no state estate tax or individual income taxes. However, this issue is unlike the issue of Ms. Rivers’, whose will is trying to claim two states instead of one.