EP 8: What Is English For "Domicile "?
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The U.S. finance and tax language sounds very foreign to anybody unfamiliar with it. This has nothing to do with when you came to the country.
In this episode, your co-hosts Jane Mepham, CFP, and Manasa Nadig, EA, dive into explaining one of these terms. In this new series (every other episode), they take a term commonly used in the cross-border space and explain what it means in plain English, and also where you are likely to find it being used.
In today's episode, they answer the question, what's "Domicile?" and where is it used?
They think you are going to love this educational bit delivered in a very short amount of time.
The views and opinions are those of the speakers, and should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.
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Jane Mepham, CFP (00:02.681)
In today's episode, we're going to do something a little bit different. So one of the things we've noticed based on a lot of conversations is when people first come to the U S the tax and financial vocabulary sounds completely different from where they are coming from. And so after thinking a lot about this and as we are planning for what we want to do next year, we've decided to do.
a couple episodes sprinkled throughout the regular episodes, which would be kind of short, 10 minutes or less, where we actually take some of these terminology, most likely found in cross border financial intact situation and kind of translate that into what we're thinking of as common English. Okay.
And so what we'll end up doing with some of these, because a lot of them, you really need to go into details to get a comprehensive and a full understanding, it's going to be a very, very high level overview. So think of this as us just introducing the terminology to you. In future episodes, we will be digging deeper into these terminologies. And so...
to kick us off. This is the first one that we are jumping into. We're going to talk about domicile, manasa. What do you want to say about that?
Manasa Nadig, Enrolled Agent (01:35.802)
I love it. So Jane, domicile is our first shorty episode. Now, if you go to the Michigan State website and if you look at the legal definition of what a domicile is, they say that domicile means a place where a person has this true fixed and permanent home and principal establishment to which
Whenever absent therefrom, he intends to return and domicile continues until another permanent establishment is established. Now, if you look at the Cornell Legal Information Institute, they define domicile as a domicile refers to someone's true principle and permanent home.
In other words, the place where a person has physically lived, regards as home and intends to return even if currently residing elsewhere. Determining where a party is domiciled is of particular importance in the field of civil procedure. Does that make sense?
Jane Mepham, CFP (02:56.273)
Okay, it does, but I think the question that comes up is, if I'm in this situation, I'm gonna start asking why. I mean, why do I care what my domicile is?
Manasa Nadig, Enrolled Agent (03:10.314)
I know, and I think that's a very important question because domicile carries legal, financial, and tax consequences. So kind of if you go back and listen to the definition, you can break it down into several parts, right? One, it's the permanent place where you live and where you intend to stay indefinitely.
So that means the domicile will determine which country, which states, and which courts have jurisdiction to your probate wills, which of them will administer your estates and or adjudicate lawsuits, as well as assess state income and estate or death taxes.
not only that, if you live in the US, your domicile will affect which state where you pay your state taxes. And again, depending on where the domicile of your beneficiaries are, if you have a will or a trust or an estate, then estate tax implications may be dramatically different from your domicile.
and that of your beneficiaries. So, and we know when we deal with cross border matters, this domicile can extend to your income and wealth worldwide. So this is why we should care, I guess, for what the legal and tax consequences and financial consequences are of the terminology.
Jane Mepham, CFP (04:53.009)
Mm-hmm.
Jane Mepham, CFP (05:07.677)
Okay, I think I can take that for today as an intro and one of the things I think you kind of refer to is the word residence and the one thing I know I want to call out is that we've seen people confusing the two residents in domicile. It's important to know the difference between the two residents and domicile because as you've sort of implied you can have more than one residence
but only one domicile, especially in a cross border situation. So like we said, we're gonna be doing more and did we do that in 10 minutes or less? So, we're gonna be doing more in 10 minutes or less.
Manasa Nadig, Enrolled Agent (05:48.098)
Oh, we did. We certainly did. We came in less than six, actually. So that's great. Yeah. So dear listener, you know what you have to do if you want to listen to more of this content and you like our episodes, please go to our website, theimcafe.com and subscribe to be notified when our new episodes come out.
Jane Mepham, CFP (05:49.805)
Excellent.
Jane Mepham, CFP (05:54.417)
Awesome!
Manasa Nadig, Enrolled Agent (06:18.198)
Back to you, Jane.
Jane Mepham, CFP (06:21.105)
I think that was a great episode. Thank you and bye.
Manasa Nadig, Enrolled Agent (06:26.574)
Bye!