Selecting A Domicile Isn’t As Easy As It Sounds

One of the most important decisions Workampers need to make when starting a full-time RV lifestyle is deciding where to call “home.”

By Greg Gerber

Many RVers think their home needs to be the state from which they launched their adventure. But, that doesn’t have to be the case, according to two lawyers who are very familiar with the RV lifestyle.

Shawn Loring and Susie Adams are the principal attorneys with Loring Law, in Livingston, Texas. Shawn worked as CEO of the Escapees organization for five years and is currently the co-owner of the group. He is licensed to practice law in Texas and California. He provides legal advice as well as financial planning services.

Susie has practiced law in Texas for 40 years. She teamed up with Shawn and Loring Law in 2017, where she specializes in domicile issues pertaining to RVers.

By definition, a domicile is the place you intend to return after a temporary absence. For some RVers, that is the state they lived in when they started their journey. They may have had a physical residence there or ties to family. But, whatever the reason, they plan to return after they’re done RVing.

However, other RVers don’t want to return to the same state. In fact, they fancy the idea of selecting a new state to call home. For them, the issue of selecting a domicile state takes on different importance – one that can have legal and financial consequences.

Residence vs Domicile

“There is a big difference between a domicile and a residence. You can have a residence where you spend the night in every town in America; but your domicile is unique to one state and that is expressed through your actions,” Shawn said. “That’s why selecting a domicile goes beyond picking a random state for tax benefits. The courts look at several factors to determine someone’s domicile.”

The factors that determine where your domicile is located include:

  • Where you receive mail
  • Where your bank accounts are located
  • Which state that issued your driver’s license
  • Where your vehicles are registered and licensed
  • Where you opt to vote
  • When you die, which state will probate your estate
  • Where you pay taxes
  • Whether you own land or property in a state

Other considerations include the location of your doctor, dentist, accountant, financial planner and even veterinarian. If they are all located in the same county of the same state, a strong case can be made that you’ve established a domicile there, Shawn explained.

Taxes are a big issue for RVers, Susie explained, because courts often become involved in making the final determination. For example, if a Workamper is from a high-tax state, like California, but declares his or her domicile to be in a low-tax state, like Texas, a court often gets involved.

“The RVer’s original state may claim he or she owes taxes to that state – even if the RVer says his domicile is in Texas,” she added. “The court will insist an RVer prove the domicile is in Texas. The judge will evaluate all factors to discern where the RVer intended to return.”

So, if the RVer’s vehicles are licensed in Texas, they are registered to vote in Texas, their mailing address is in Texas and so is their bank account, but they haven’t updated their will, which shows they still live in California, it could be difficult for California to claim the RVers must pay taxes to that state.

“The courts can look at anything they want in order to make a determination regarding a person’s one-and-only domicile,” Shawn said. “There is a case where the decision was decided based on a tennis club membership, and another case which took hunting and fishing licenses into consideration.

“You might even have your aunt’s antique furniture stored in a state. That creates a presumption you are coming back to get it,” he added. “Just be mindful of stuff that isn’t in your RV because it can connect you to a specific location.”

No Perfect Domicile

One of the most frequently asked questions of new Workampers is, “What is the best state to establish a domicile?” The honest answer is, there isn’t a perfect state. Every state has advantages and disadvantages.

When I was full-time RVing from 2014 to 2017, Arizona was my domicile. I lived there before I launched, my business was registered there, I voted and paid taxes there, I had an Arizona driver’s license and a post office box. Best of all, Arizona did not charge sales taxes on advertising sold, and my business at the time was 100% supported by advertising. It would have been hard for me to declare another state as my domicile.

Still, there were some disadvantages. Although state taxes were low, Arizona still imposed them. They also imposed vehicle taxes based on the value of the car and RV instead of a flat rate. Most annoying, even though the RV was rarely in the state, Arizona still required each vehicle to pass an annual emissions test.

So, which state is best to establish a domicile will depend on several factors. The most-frequently cited by Workampers include:

  • Best state for income and property tax
  • Does the state impose tax on using or possessing certain property?
  • Fees for vehicle registration or unusual requirements, like annual emissions tests or inspections
  • State rules for business registration, licenses, and sales taxes
  • State rules for homeschooling children
  • Does the state require you to spend a certain number of days there every year to claim a domicile?
  • Is insurance more expensive in one state or another?

There is no real rush for selecting a domicile. RVers can launch their adventure by keeping their current domicile while they check out options and potential places to live, Susie explained.

“I recommend creating a spreadsheet of the states you’d like to call home and the factors that are most important to you. Then start researching which is best for you,” she said. “Make sure you aren’t just jumping in blindly to select a domicile. It is a very important decision.”

Each Situation is Different

“If there is one thing that I’m wary of, it is that RVers have some pretty strong opinions about the best states in which to establish a domicile. They are often very happy to share those opinions with you,” Susie said. “They will tell you with great certainty that the only correct answer is to do whatever they decided to do.

“But, that couple may have been retired, and you own a business or still have children who are being homeschooled. There is no one-size-fits-all answer. It is very much a personal decision,” she added.

One area that gets overlooked is asset protection. Some states are better than others for offering additional protection, Shawn explained. This is very important if Workampers are involved in an accident for which they wind up being sued. How much a plaintiff can get is a function of the state you’re domiciled in because you are subject to the laws of that state.

“Some states will protect IRAs and 401-K accounts. When people live in a sticks-and-bricks home, most states offer some level of homestead protection. That means, if you get sued, you cannot lose your house. However, that may not be the case with an RV,” he added.

The most important aspect of selecting a domicile state comes down to one factor: Do you intend to return to that state when you are done traveling, Shawn said.

“The state you select could be perfect, on paper, and hit every financial and economic box you dream about coming true,” he explained. “But, if you never go there, then don’t pick that state for you because it will void your attempt at claiming it as your domicile state.”

Some states seem to do a lot to lure RVers to select their state as a domicile. Doing so, increases the state’s population, which, in turn, influences the number of representatives the state has in Washington, D.C. The state’s population also determines how much federal aid it is qualified to receive.

“Some states are more than happy to have you call it your home as long as you don’t cost them anything, such as unemployment benefits,” said Susie.

She recalled a case where a family from Minnesota sold their home and went to South Dakota to register their vehicles. Yet, they had no real connection to either Minnesota or South Dakota for the next 18 months. Finally, Minnesota demanded back income taxes, penalties, and interest. The family lost because a judge ruled they had no real connection to South Dakota.

“It’s really, truly important that you don’t select a domicile state out of the blue. Rather, wisely choose the state that will become your hub during the time you’re living in the RV,” Susie said.

Get Legal Advice

Shawn and Susie recommend that people get legal advice and start getting their affairs in order six months in advance to launching their RV adventure, especially, if it involves switching domiciles.

“You’ll have to secure a mail-forwarding address, but also establish relationships with doctors, accountants, financial planners and other professionals in your new area. Some of those appointments have to be made months in advance,” Shawn said.

RVers may want a lawyer to draft up an affidavit or declaration of domicile.

“It’s not a magic elixir that will cure all your domicile issues,” Shawn explained. “But it is one more thing you can refer to that demonstrates your intent. You are making a public record of your intention long before any litigation or other events come up. There is a bit more trustworthiness of your intention because you were contemplating it long before some circumstance arose.”

Editor’s note: Loring Law closed on May 31, 2023.

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