Best Domicile State For Full-time RVers

 

First of all, you should take a few minutes to read the article titled Legal Residency and Domicile so you know exactly what a domicile or state of legal residence (SLR) is. To summarize the article, changing your SLR has two and only two legal requirements. First, you must be physically present in the new state, even if only for a few minutes, and Second, while you are physically present, you must have the intention of making that state your new SLR and of ending your residency in the former state. Those two requirements are all that's necessary. You don't have to buy property in the new state, open a bank account there, vote, get a driver's license, file a legal notice in the paper, or anything else. Physical presence, combined simultaneously with the appropriate mental intent, is all that's required. Unfortunately, proving mental intent can be difficult sometimes. So to prove that you really did intend to make the new state your SLR, it might be a good idea to do some or all of the things mentioned below (in this article), with the understanding that those actions are not what make you a legal resident; rather they are simply evidence that you did intend to make the state your SLR.

Texas (TX), South Dakota (SD), and Florida (FL) are the most popular states for full-timers mainly because 1) they are no income tax states (and retirement income is not taxed), 2) there is no personal property tax on vehicle values, 3) there is no estate or inheritance tax, and 4) they have great mail forwarding services that make it easy to establish residency.

A special class of drivers license is needed for driving most RVs with a TX driver's license, but not for SD or FL. Here is the licensing information of TX. 1. Class A driver license permits a person to drive any vehicle or combination of vehicles with a gross combination weight rating of 26,001 pounds or more, provided the gross vehicle weight rating of the vehicle(s) being towed is in excess of 10,000 pounds; including ... 2. Class B driver license permits a person to drive the following vehicles, except a motorcycle or moped: a. a single unit vehicle with a gross vehicle weight rating of 26,001 pounds or more, and any such vehicle towing either a vehicle with a gross vehicle weight rating that does not exceed 10,000 pounds, or a farm trailer with a gross vehicle weight rating that does not exceed 20,000 pounds; ... Texas also requires vehicle inspections for any vehicles registered in that state but SD and FL do not. If you do have vehicles registered in TX, you don't have to worry about it when you're out of state, but you do have to get your vehicle(s) inspected any time you go back into Texas.

If you are a disabled veteran, you should know that in TX, you can claim two vehicles and be charged $4 each annually for registration. You can have disabled plates on both. You can have a disabled plate on a 3rd vehicle but you will pay full registration fees depending on the type of vehicle and weight. Depending on city, at age 65 your dwelling taxes are reduced and frozen at that level for a stick house. As a 100% disable veteran there is no tax on dwelling.

With regards to SD, one other thing to be aware of is the requirement that you must go to SD in person every 5 years to renew your driver's license. If your birthday is in the winter, you can renew 6 months early or request an extension for as much as 6 months. In TX you can simply mail in a license renewal request form with the appropriate fee to get a renewed license with each and every renewal; FL only allows this every other renewal period. In TX the license fee is $25.00 for a 6 year driver's license; the license fee in FL is $48.00 for a 8 year driver's license.

Alaska (AK), Wyoming (WY), Washington (WA), and Nevada (NV) are also "no income tax" states and have similar benefits to the top three TX, SD, and FL -- they just aren't as popular. For some, depending on individual situations, they may be better.

Tennessee (TN) and New Hampshire (NH) are also "no income tax" states in that they don't tax "earned income", but they do tax dividends and interest which can be an issue for those relying on that type of retirement income.

Even though there are 9 states total that are "no income tax" states, some states provide special tax benefits to military retirees. The complete list of states that do not tax retired military pay are: Alabama, Alaska, Florida, Hawaii, Illinois, Kansas, Kentucky*, Louisiana, Massachusetts, Michigan, Mississippi*, Missouri*, Nevada, New Hampshire, New Jersey, New York, North Carolina*, Ohio, Oregon*, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming. (*With conditions)

Another difference to consider between TX and SD is the sales tax when purchasing a new rig: TX charges 6% and SD charges 3%. These rates were still in effect on Jan. 1, 2012 and may be a considering factor if you are planning to purchase an expensive item such as an RV or a new towed vehicle. Therefore, those that haven't purchased their rigs before establishing a full-timing residence may want to consider establishing residence in a "no sales tax" state first which includes Montana (MT), Oregon (OR), Maryland (MD), New Hampshire (NH), and Alaska (AK). They may be able to buy the RV and other vehicles without sales tax and then transfer them to a "no income tax" state later (although they could still be hit with a "sales-type" use tax if they try to transfer vehicles to another state too soon).  Also, Montana (MT), Oregon (OR), and Maryland (MD) have income taxes and tax retirement income, so any sales tax savings may be offset by income tax depending on how the numbers work out. Montana (MT) also has a personal property tax on vehicles.

Many full-time RVers set up a Limited Liability Company (LLC) in a "no sales tax" state such as Montana (MT) before they make a major vehicle purchase such as an RV or new towed vehicle to save several thousands of dollars worth of sales taxes. This way the MT based company purchases and owns the vehicle rather than you as an individual(s) residing in a state such as TX, SD, or FL. Setting up and overseeing a MT LLC should only be done by a competent MT attorney and ONLY if you are truly a 100% full-time RVer (not applicable to part-time RVers) that actually live in your RV as your home and you travel throughout the country rather than simply park it in your domicile/residency state. You can own a LLC in any state in the U.S. (including MT), no matter which state you choose as your domicile/residency state. Other advantages to a MT LLC are asset protection (works exactly the same as a corporation), no probate or death taxes for the surviving spouse (works exactly the same as a living trust), no annual vehicle inspections, low cost annual vehicle registrations (no annual vehicle registration fees for vehicles 11 years or older), and MT has one of the lowest cost vehicle insurance rates in the nation. An annual State and Federal Income Tax Return must be filed by the MT LLC reflecting all earned income (if any) by the company; this task is completed by the law firm that is overseeing the MT LLC. Lastly, the law firm that is overseeing the MT LLC also provides mail forwarding services for all company mail.

New Hampshire (NH), as a "no income tax" and "no sales tax" state, taxes only "interest and dividends" so it may be a winner for those buying an RV and that don't have much income from those sources.

Alaska (AK) can be a great choice, but there are pros and cons, and the act of establishing residence there is simply not very convenient. With that said, if I were already a resident of Alaska (AK), I certainly wouldn't change.

So, "the best domicile or residency state" depends on individual circumstances, and it's very, very important that each person do the homework for their own personal situation. Income levels, sources of income, convenience, taxes (income, sales, personal property), insurance costs and coverages, voting, license renewals, vehicle registration costs and renewals, and much more play a part in the decision. And it's not just particular states, but counties and zip codes within the states make a difference.

You will certainly want to set up your domicile/residency in a "RETIREE FRIENDLY" state with no income tax, but I just want to caution others reading this article that may not be the case in your situation; especially if you are not retired and/or are "workampers" (full-time RVers that work for income or free/reduced rate campground fees).

NOTE: If you are retired and live full-time in timeshares or live full-time on cruise ships, then this article definitely applies to you too.


Setting Up Domicile in Texas (TX)

 

In our particular situation, since we are full-time RVers, we chose to make Texas (TX) our domicile/residency state. Also, since we are lifetime members of the Escapees RV Club, we use the Escapes Mail Service for our legal residence address and forwarding services. We feel their mail forwarding service is the best one available for anyone wanting to become a Texan. Their mail service has the best prices and is the most flexible. We signed up for the Escapees Mail Service 90 days before we actually left the state of California. This amount of time is perfect in that it allows you plenty of time to send out Change of Address notifications to each and every person and business you want to notify; it also allows you to NOT notify all of the junk mail companies of your new address. We do not recommend submitting a Change of Address with the U.S. Post Office unless you want ALL mail forwarded to you, no matter what it is.

With regards to driver's licenses, I acquired a Class A non-CDL license in California (CA) and simply traded my CA Class A license for a TX Class A license with a new 6 year expiration date. My wife Debbie traded her CA Class C license for a TX Class C license with a new 6 year expiration date. Since I am the holder of a Class A license, I do all of the RV driving and Debbie does most of the SUV driving. This arrangement works out great for us, and neither of us had to retake the written tests nor the driving tests when we got to TX. We simply had to show up in person, turn in our CA license, take a new photo, and pay the new license fee which was $25.00 per person (fee back in June 2011). We got a temporary TX driver's license that day and our official license in the mail 3 weeks later. NOTE:  If you personally own any vehicles, you need to bring your vehicle registrations with you at the time of getting your TX driver's license. You can also elect to register to vote in TX by simply checking a box on the form you fill out to get your TX driver's license.

With regards to banking, we looked at all of the large coast-to-coast banks and credit unions. We decided on going with Bank of America (BofA) for several reasons. We feel they have the best free online banking software with free bill pay. BofA also gives us free checking, free notary public service, free ATMs, free stock trades through Merrill Lynch, and their branch offices are dispersed throughout the country. There are also many other reasons we like to bank with them such as great customer service and much more. Now our personal checks show our TX address as well as a TX branch location as our banking institution. Having a bank located in your domicile state is not necessary, but it is truly that one extra step that proves that TX is your domicile/residency state for inquiries by your former "residency state" tax board or the Internal Revenue Service (IRS).

Since we have been using Sprint as our phone carrier for over 15 years now, we simply kept our CA phone numbers and gave Sprint our new TX address. This works out fine since we did not want to change our cell phone numbers after so many years of having the same ones. Since our phone plans are unlimited everything legacy plans, we also did not want to switch our phone plan or phone carrier. Anyone wanting a great cell phone carrier as a full-time RVer should look at either Sprint or Verizon. They both have the best coverage area (3G/4G) with unlimited free roaming services; whichever of these two carriers have the best plan for your family is the one you should select. Here is an article I wrote titled Internet Access On The Road; it describes how we use Sprint for both our phone and internet services.

Lastly, you will need to use TX as your domicile/residency state for purposes of vehicle insurance (for any personally owned vehicles) and for health insurance coverage. The insurance companies will base your rates on your permanent address location without any regards to the fact you may or may not ever physically live at that address. If you use the Escapees Mail Service, your insurance rates will be based on the 77399 zip code in Livingston, TX. Therefore, when selecting your domicile/residency state, check the insurance rates for the zip code of the mail forwarding service you are planning on using as your legal permanent address BEFORE you make a final decision on which state you will start calling home.


Full-time RVer Domicile State Links

 

Escapees RV Club - best RV club to join if you are a full-time RVer no matter what type of RV you live in. You must be an Escapees RV Club member to utilize their mail forwarding service.

Escapees Mail Service - this .pdf explains in detail that the Escapees Mail Forwarding Service is a licensed commercial mail-receiving agent designed for full-time RVers and managed by experienced full-time RVers.

How To Become A Real Texan - this .pdf tells full-time RVers how to utilize the Escapees RV Club and the Escapees Mail Service to make Texas their legal domicile/residency state.

Alternative Resources - this is a very popular mail forwarding service for full-time RVers that want to make South Dakota their legal domicile/residency state.

Americas-Mailbox - this is a very popular mail forwarding service for full-time RVers that want to make South Dakota their legal domicile/residency state.

My Home Address, Inc. - this is a very popular mail forwarding service for full-time RVers that want to make South Dakota their legal domicile/residency state.

My RV Mail - this is a very popular mail forwarding service for full-time RVers that want to make Florida their legal domicile/residency state.

Family Motor Coach Association (FMCA) - a good RV club to join if you are a full-time RVer living in a Class A, B, or C motor coach. You must be an FMCA member to utilize their mail forwarding service.

FMCA Mail Forwarding Service - the Family Motor Coach Assoc. (FMCA) Mail Forwarding Service is used by many full-time RVers that want to make Florida their legal domicile/residency state.

Good Sam RV Club - great RV club to join if you are a full-time RVer. You must be a Good Sam member to utilize their mail forwarding service.

Good Sam Mail Service - the Good Sam Mail Service is used by many full-time RVers that want to make Florida their legal domicile/residency state.

Mail Boxes Etc. - this is a popular mail forwarding service for full-time RVers that want to make TX, SD, FL and many other states as their legal domicile/residency state.

The UPS Store - this is a popular mail forwarding service for full-time RVers that want to make TX, SD, FL and many other states as their legal domicile/residency state.

Bennett Law Office - one of the two best law offices used by full-time RVers that want to set up a Limited Liability Company in Montana.

Heggen Law Office - one of the two best law offices used by full-time RVers that want to set up a Limited Liability Company in Montana.

RV Driver's License Requirements - this linked page lists the driver's license requirements for all 50 states plus Washington, DC with links to all of their DMV/DOT offices.

TX Dept. of Transportation (TX DOT) - info on TX driver's license, vehicle registration, and voter registration.

SD Dept. of Transportation (SD DOT) - info on SD driver's license, vehicle registration, and voter registration.

FL Dept. of Highway Safety and Motor Vehicles - info on FL driver's license, vehicle registration, and voter registration.


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