Joan Rivers' estate planning gambit: A New York state of residence

Estate planning quirk that splits Ms. Rivers' state of residency and state of domicile catches experts' eyes

Dec 11, 2014 @ 12:47 pm

By Darla Mercado

Joan Rivers' will is generating plenty of chatter in the estate planning community, as the document suggests the comedienne reduced her estate tax burden by claiming residency in one state and being based elsewhere.

The late Ms. Rivers, who passed away in September at age 81, had a will on file at the Surrogate's Court in New York, dated Nov. 16, 2011. A copy of that document, which hit the tabloids on Dec. 9, is available here, via The New York Post's Page Six.

Most notably, the will states that Ms. Rivers is a resident of the Empire State, but also declares that her state of domicile — the location where she intends to “reside indefinitely on a permanent basis” — is California. A provision further in the document also declares that New York laws will apply to the validity, interpretation and administration of the will, but provided that Ms. Rivers is domiciled in California when she dies, then the laws of the Golden State will apply instead.

The attorney whose name is on the will, Ilene Turk, had no comment.

Estate planning attorneys noted that while it's not unusual for celebrities to be bicoastal — and many high-net-worth clients have homes in multiple locations — the distinction between Ms. Rivers' state of domicile and her state of residence may make a difference with respect to state estate taxes. It's also a tactic that's hardly ever seen among estate planning clients.

“New York and California have high income taxes, but New York still has a state estate tax of 16%,” said Bruce D. Steiner, a tax and estate planning attorney at Kleinberg Kaplan Wolff Cohen. “Lots of people have more than one home, and there's an estate tax benefit to being in California.”


Readers who've paid attention to the developments in New York know that the Empire State raised its estate tax exemption from $1 million to $2.062 million per person in April. It will rise in each year until Jan. 1, 2019, where it will reach parity with the inflation-adjusted federal estate tax exemption.

This is what makes New York estate taxes difficult. The exemption is phased out for those with a New York taxable estate whose value is 5% greater than the state estate tax exemption. If you die between April 1, 2014, and March 31, 2015, estate taxes are due on the entirety of your estate if it's worth $2.165 million — 5% more than the exemption of $2.062 million.

In the Golden State, where Ms. Rivers is domiciled per the will, there is no estate tax and there hasn't been since 2005.


Generally, clients can be residents in many locations, but they can only be domiciled in one in the context of estate planning. “The domicile is where you always intended to return; it's where you establish your primary contacts and your social clubs,” said Gideon Rothschild, partner at Moses & Singer. “It sticks with you even if you have multiple residences.”

But what are the benefits to considering residency in New York with respect to estate planning? One thing that might factor into that decision is the state's probate process. “In New York, it's quite simple: so long as nobody objects, the court doesn't get involved in estate administration,” said Mr. Rothschild. “In California, it can be more complex and time-consuming, and can involve higher legal fees.”

Advisers run into the issue of selecting residency and domicile with many of their high-net-worth retirees: Clients in New York or New Jersey might own a second home in Florida, where they spend their winters — and where there are no estate and individual income taxes.

But in practice, clients hardly ever declare that they're domiciled in one state and residents of another. Home is either New York or Florida. Never both.


Plenty of planning goes into determining where a retired client will call home in order to receive the appropriate tax benefit. Leaving one place for the other is not an easy decision, noted Charles Douglas, editor of the National Association of Estate Planners and Councils' Journal of Estate and Tax Planning. “You look at the intent to abandon the old domicile and establish a new one,” he said.

State tax authorities will look at voter and vehicle registrations, as well as a client's driver's license, in order to determine where a client is based. “You have to be intentional about having one state be your place of domicile,” Mr. Douglas noted.

Nevertheless, when a client decides to switch domiciliary states, he or she is also claiming that jurisdiction for residence. Estate planning experts noted that a decision to have two different states for domicile and residency could call the attention of state tax departments.

“If you're domiciled in California, but you say in your will that you're a resident of New York, you're waving a red flag to the state of New York's taxing authorities,” noted Mr. Steiner.


What do you think?

View comments

Upcoming event

Sep 10


Denver Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Schwab's Jeff Kleintop: Prep for volatility given China trade uncertainties

China could be considered a developed market in five to seven years , according to Jeff Kleintop, chief global investment strategist, Charles Schwab.


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

Funding for Reg BI, other SEC advice reform efforts denied in Waters amendment

House likely to approve measure that effectively kills rule package, but it faces uphill battle in Senate

Wall Street lashes out at Sanders' plan to pay off student debt with a securities trading tax

Financial pros argue that a transaction levy will hurt mom-and-pop investors along with investment houses.

GPB paid B-Ds and reps steep commissions to sell troubled private placements

GPB paid commissions of 9.3%, or $167 million altogether, on the firm's private placements.

Give us a break, active managers say

Seven portfolio managers share their outlooks for the rest of the year, generally agreeing that it's been hard for active managers to stand out.

GPB Capital reports decline in value of two biggest funds

One has dropped by 25.4% and the other by 39%, according to the company.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print