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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Speaker 1 (00:06):
Welcome to the International Money Cafe Podcast, the show where we filter out the noise on cross-border taxes, finances, and life in the us. I'm your host, Jen Metham, CFP.
Speaker 2 (00:18):
I'm your host, ADE. Yay. Join us on this journey as we explore these unique challenges facing us, inbound outbound families and businesses onto the show.
Speaker 1 (00:29):
In today's episode, we're going to do something a little bit different. One of the things we've known is based on a lot of conversations, is when people first come to the US the tax and financial vocabulary sounds completely different from where they are coming from. 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 short, 10 minutes or less, where we actually take some of these terminology most likely found in cross-border financial in tax situation, and translate that into what we are thinking of as common English. 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. To kick us off, this is the first one that we are jumping into. We going to talk about domicile manasa. What do you want to say about that?
Speaker 2 (01:57):
I love it. So Jane Domicile is our first shorty episode. If you go to the Michigan State website, and if we 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 principle establishment to which whenever absent there from he intends to return, and domicile continues until another permanent establishment is established. If we look at the Cornell Legal Information Institute, they define domicile as a domicile reference to someone's true principle and permanent home. In other words, the place that a person has physically lived regards as home and intends to return, even if currently residing elsewhere, determining where a party's domiciled is of particular importance in the field of civil procedure. Does that make sense?
Speaker 1 (03:11):
It does, but I think the question that comes up is, if I'm in this situation, I'm going to start asking why. I mean, why do I care what my domicile is?
Why Care What My Domicile Is?
Speaker 2 (03:22):
I know, and I think that's a very important question because domicile carries legal, financial, and tax consequences. So if you go back and listen to the definition, you can break it down into several parts. One, it's the permanent place where you live and where you intend to stay indefinitely. 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 in 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. And we know when we deal with cross-border matters, this domicile can extend to your income and wealth worldwide. This is why we should care, I guess, for what the legal and tax consequences and financial consequences are of the term knowledge. Okay.
Speaker 1 (05:08):
I think I can take that for today as an intro, and one of the things I think you kind of referred to is the word residents, 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 going to be doing more in, did we do that in 10 minutes or less?
Speaker 2 (05:45):
Oh, we did. Excellent. We certainly did. We came in less than six, actually. Awesome. So that's great. 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, the I am cafe.com and subscribe to be notified when our new episodes come out. Back to you,
Speaker 1 (06:12):
Jane. I think that was a great episode. Thank you, and bye bye.
Speaker 3 (06:17):
Thank you for listening to the International Money Cafe podcast. The content is for informational and educational purposes only, and should not be used as a substitute for professional advice. Seek the advice of your qualified service provider with any questions you may have regarding your cross order finances and tax needs.