Establishing Legal Residency Is Important And Easy
Living in Texas without establishing residency can cost you voting rights, tax advantages, state-specific benefits, and create problems for your estate. It may be taking money from your pocket and the pockets of your heirs. The good news is that establishing legal residency is easy! Read on for details about the steps you should take.
Who Can Establish Residency?
As the 5th fastest-growing state in the country, Texas is bringing new residents in droves.
If you’re planning a move to Texas, have recently moved, or if you’ve been living here but haven’t established legal residency, you should consider becoming a legal resident as soon as possible. Even if you have another residence elsewhere, you can become a legal resident if you think of Texas as your home.
Domicile vs. Residence
There is a legal distinction between a domicile and a residence. When people talk about their place of “legal residence,” they mean their “domicile.”
Your residence is where you normally live, live most of the time, or return to after temporary absences. In contrast, your domicile is your true, fixed, and permanent home.
You can have only one domicile, but you could have multiple residences. If you spend some part of the year in Texas and another part in Illinois, you might have a residence in both places, but only one can be your domicile: you can only establish legal residency (or domicile) in one state.
Your domicile isn’t necessarily determined by where you spend the most time or by how long you’ve been there. Instead, it’s chiefly a matter of your intention. How do you show that you ‘intend’ to make Texas your home? Through your actions.
There are specific actions (see our checklist further below) that state agencies recognize as demonstrating your intent to make Texas your permanent home. Do enough of these things and it’s easy to establish Texas as your domicile.
Why You Should Establish Residency
Your legal residence (or “domicile”) determines how you are taxed, Medicaid eligibility rules, how your estate is managed, and your ability to cut through a variety of state-specific regulations (hunting licenses, ability to purchase handguns, etc.)
Common Reasons To Make Texas Your Domicile
- Probate: be certain what state’s laws will govern your estate.
- Tax purposes: Texas has many tax advantages, for both income and estate planning.
- Voting: you can’t vote in Texas elections unless you’re a resident.
- Getting a divorce: Texas is a community property state.
- Personal and recreational regulations: easier access to hunting, firearms purchases, carry permits, etc.
How To Decide Where To Establish Residency
When You Die, Your Estate Will Be Probated In Your State Of Legal Residence
If you have (or recently had) a residence in another state, this might create ambiguity about your residency status. That could cause confusion when it’s time to probate your estate, so you should do everything you can to ensure clarity as to your domicile.
For Texas Residents, Your Estate Will Be Administered According To Texas law
This is favorable for many people (Texas has no state inheritance or gift taxes, for instance), but there could be reasons to maintain legal residence in another state. Each state has its own inheritance laws that will treat your estate differently, especially if you don’t have a will. Talk to an estate planner in Texas to determine how becoming a legal resident might affect your estate plans.
Texas Is A Community Property State
Under community property laws, all assets obtained during a marriage are treated as both spouses’ equal property. It doesn’t matter where you were originally married or where you spent most of your marriage; once you meet the requirements for texas residency, community property rules apply.
Community property rules are not only significant for divorce; they also have big implications for inheritance. Your estate could be distributed very differently under community property rules than in a non-community property state. Read more about Texas inheritance laws in our blog about the disadvantages of dying without a will.
Texas Is One Of The More Tax-Friendly States In The Country
There is no estate tax or inheritance tax in Texas. This can have a big impact on estate planning. What’s more, there is no state personal income tax. This can make a massive difference for workers and even for retirees drawing income from certain trusts or even some types of retirement accounts (such as a traditional IRA).
Texas Residency Requirements
Becoming a resident requires that you demonstrate your intent to make Texas your permanent home. How do you “demonstrate” that intent? It depends on why you need to prove you’re a resident.
There are a few exceptional cases (like divorce or in-state tuition) with minimum stay requirements, but mostly it comes down to collecting the right documents.
There are three fundamental steps for residency:
Move to Texas, establish an address.
Change your Records.
Fulfill any length of stay requirements.
This is a simplified list. I’ll elaborate on these steps below and break them down into a simple checklist. Generally, as long as you follow the checklist, you’ll be covered.
How To Establish Domicile In Texas: Three Basic Steps
Here are the basic steps that everyone should take to establish legal residency. Since the requirements vary depending on your purpose, you should take as many of these steps as possible to be sure that you will be considered a legal Texas resident.
First, move to Texas!
In other words, establish a home. Rent or buy a property, make sure that your name is on the lease or deed, and if possible, make sure that the utilities are in your name (this last part isn’t strictly necessary, but it’s helpful).
Note that getting a job in Texas can help establish your domicile, but it’s not a requirement.
Second, change all of your records.
Start by changing your address with the USPS. Then get your Texas driver license or ID and update your car registration and vehicle insurance address. Next stop: Voter Registration (you’ll need your new Texas ID). Finally, change your address on any personal accounts (bank accounts, brokerages, life insurance, etc.).
Third, fulfill any length of stay requirements.
Most benefits of residency have no minimum time requirement. You can register to vote the day you become a resident as long as you have a Texas ID. Others do, though. Such as in-state tuition or applying community property rules in a divorce (see the section above for more details on this).
Here’s An Easy Checklist Summarizing The Three Steps Above
If you can do most of these you’ll be in good shape!
You don’t need to do everything on this list.
Remember that domicile is about your intent to make Texas your permanent home (demonstrated by your actions). Not every Texas resident meets each one of these conditions. Your goal is to do as many of these as you can. The more boxes you can check off, the easier it is to demonstrate that you are domiciled in Texas.
Frequently Asked Questions About Texas Residency:
A: There is generally no specific time requirement except for divorce or in-state tuition. See the above section for details on these time constraints.
A: No, there is no Texas estate tax or gift tax (although federal taxes still apply).
A: Yes! Read about the difference between residence vs. domicile above
Special Residency Issues
Probate will be conducted under Texas law for any person domiciled in Texas at the time of their death. There is no minimum time limit for legal residency, just do as many of the things as you can on the checklist above in order to demonstrate your intent to be a permanent resident of Texas.
There are no time constraints, but you’ll need a Texas driver license, Passport, or other ID accepted by Texas for establishing residency (for a complete list, see this FAQ page on voting in Texas).
Getting a divorce:
To take advantage of Texas’s community property rules, you need to live here for at least six months before getting a divorce.
There is no personal income tax in Texas, but if you’re earning income in another state, you’ll probably need to pay taxes in that state.
Driving and State ID:
There is no minimum stay if you surrender a license from another state. Otherwise, you need to have been living in Texas for 30 days. You’ll need two documents demonstrating that you have a Texas address, such as a utility bill and a deed or lease (visit the Texas Department of Public Safety for a comprehensive list).
HHSC follows 42 CFR §435.403 in determining a person’s state residence. They don’t require as much documentation as qualifying for in-state tuition. Basically, if you intend to continue residing in Texas or if you entered Texas seeking employment, you’re a resident for this purpose.
Implications For Estate Planning
Are you thinking about becoming a Texas resident? An essential but often overlooked step is to consider the effect on your estate plan. Being domiciled in one state compared to another can make a big difference in how your estate is distributed as well as the costs to manage estate assets. Make sure that your estate plan is established or updated by a Texas attorney who can adapt your plan to Texas law, ensuring that it will be effective at meeting your goals.
If you’re still unsure how or whether you should establish residency in Texas, at Holman Law, we can easily walk you through the potential benefits or consequences for your particular situation. Call now to get straightforward answers with no consultation fee.
Steven C. Holman
Estate Planning and Elder Law Attorney
I love to spend time with my wife and three children and serving the Dallas Fort Worth community. I provide clients with a wealth of knowledge and experience navigating each individual’s Estate Planning needs including Trusts, Probate, Elder Care Law, and Long Term Care Planning. My law firm specializes in assisting clients with complicated legal forms and qualifying for the maximum Medicaid and Veteran (VA) benefits in Texas.