With the stock market crash that we have recently experienced, the decline in
the market value of your homes and your Madoff losses, some of you may now be
considering certain important lifestyle changes. How will these changes impact
on your choice of domicile
Can you now afford to maintain two homes? Should you sell one or both or at
least downsize one of them?
Should you spend more or less time in Florida? Should you cancel your summer
vacation abroad and stay in New York those extra days or go elsewhere?
Should you sell any items that are "near and dear" to you such as works of
art, coin collections or one or both yachts that you have kept on a permanent
basis in either Florida or New York? One of the four primary factors that a New
York tax domicile auditor is required to take into account is where you keep
items that are "near and dear" to you. A Florida or New York Court addressing
the Madoff fraud may or may not consider that a major factor in deciding whether
you have not effectively changed your domicile to Florida.
If you are considering dropping out or changing your status in one of more
country clubs or other organizations, which should you favor?
If you are considering doing consulting or other work in New York or
Florida, will it affect your domicile status?
For those of you who have previously considered but never taken steps to
formally change your domicile from New York to Florida, you might wish to
consider doing so at this time. If you are going to change your domicile, I
suggest you do it sooner than later. You may wish to change your domicile to
Florida even though you are present in a calendar year for more than 183 days in
New York and still have to file a New York resident income tax return. As I
mentioned earlier, there are no specific number of days that you have to be
present in Florida to become a Florida domiciliary. The more, of course, the
better if a domicile change is ever challenged.
For those of you who are considering changing your domicile to Florida, I
suggest you review all sessions of my website to decide whether or not you are
eligible to do so. The change may not only be of some advantage to you if you
become enmeshed in Madoff litigation but result in some savings in New York
income and estate taxes. But beware of the possibility that a change of domicile
specifically to acquire Florida homestead creditor protection may not be viewed
favorably by the courts.
It is ironic that after discovering your investment with Madoff is almost
worthless that you have to be concerned with the possibility that you may have
to pay back some of the cash that you received from his company, some or all of
which you may have already spent. It would not be so bad if all of the cash
taken out by all investors was paid back and you could share in the "pot," but
that will never happen.
Some of you have more to worry about than others. If you have received back
less than your investment, you are not as vulnerable as those of you who have
received back more than you have invested. If you are a smaller Madoff investor
or received a small amount back, you may fall under the radar screen.
There may be various successful defenses that you can raise if any proceeding
is commenced against you to claw back funds.
As I stated at the outset, the fact that you are domiciled in either Florida
or New York may not have any impact on attempts to claw back cash received by
you. But it is a possible factor and one that you should review with your
professional advisor before making any change. I have referred to the Florida
homestead exemption. Both you and your advisor should review Session 8 at this
website which deals with that subject matter in some detail.
During my presentation, I have referred to Madoff’s Ponzi scheme. Although
there is an alleged confession, as of this moment there has been no indictment
and Madoff should be considered criminally innocent until proven guilty.
I will be pleased to discuss your particular situation on a professional
confidential basis. If you would like to contact me, I suggest you either email
me at arl@lbfirm.com or contact my office at
(716) 204-1150 to arrange for a consultation in either Florida or New York.
For biographical information concerning my qualifications, click on
Biographical Information at this website. If you would like any additional
biographical information, please contact me and I will furnish it to you at no
cost or obligation.
For additional contact information, refer to Contact Information at this
website.
For a session list of related domicile issues that may be of importance to
you, refer to Session List at this website.
