In recent years, our Trusts & Estates Team at FMJ has noticed a steady rise in clients who split time between Minnesota and warmer and/or more tax-friendly states (those without state-based estate tax). Many of these clients eventually begin to explore what it takes to formally shift their legal residence away from Minnesota to the new state. Because of this trend, we often advise clients on the practical and legal issues tied to residency.
Establishing residency in a new state is not a single event, but rather a series of choices and actions that show a clear intention to make that new state a permanent home. We encourage clients to think of this as “building a case” and making sure the facts of their situation tell a consistent story of leaving Minnesota and putting down roots elsewhere. No one factor alone controls the outcome. Instead, the Minnesota Department of Revenue evaluates the whole picture.
What Are Minnesota’s Residency Tests?
Minnesota applies two different tests to determine residency: (1) the “183-Day Rule,” which is largely objective, and (2) the “domicile test,” which is more subjective.
Minnesota’s “183-Day Rule” Test for Residency Explained
The 183-Day Rule looks at whether a person spends six months and a day (183 days) or more in their claimed state of residency in a given calendar year while also owning, renting, or maintaining a dwelling in the state that is suitable for year-round use. Importantly, partial days still count as full days, except when simply passing through the state in transit. For example, if you fly in late on a Friday and leave early that following Sunday, each of those days fully counts toward the total (3 days toward the 183). On the other hand, driving across a state without stopping or having a layover at an airport generally would not.
You are likely to be treated as a Minnesota resident if you cannot show that you spent more than half the year in the new state of residency, even if you believe you are domiciled elsewhere. This means accurate day counts are essential. Keeping logs, receipts, or even using an app to track your movements can make the difference if the Department of Revenue ever asks you to prove where you spent your time. There are known cases where the Department of Revenue will use social media activity, cell phone location data, and credit card/banking activity as evidence in making a 183-Day Rule determination during the audit process – so diligently following this rule is a must!
The Department of Revenue DOES NOT count all time outside of Minnesota as aggregate time establishing a new state of residence (it must be physically spent in the new state). For example, vacation or travel time spent in a tertiary state or another country – not in the new state – does not count towards establishing residency outside of Minnesota (See Minnesota Supreme Court decision Mauer v. Commissioner of Revenue).
Minnesota’s Domicile Test for Residency – Intent Matters
Even if you “pass” the 183-Day Rule Test, you may still be considered a Minnesota resident if your “domicile” remains here. Domicile is determined by both physical presence and intent. The Minnesota Supreme Court in Larson v. Commissioner of Revenue referred to this as the “locus of life.” The Department of Revenue examines many objective indicators to see if your actions line up with your stated intent.
Common Evidence/Factors in Residency Audits
- Where you spend most of your time,
- where your spouse and children live,
- what driver’s license you carry,
- where your vehicles are titled and insured,
- where you are registered to vote,
- where you serve jury duty (based upon driver’s license or voter registration),
- where you primarily receive or forward mail,
- where you pay and file income taxes,
- where you are physically employed (including location and status of professional licensure),
- business ties and relationships,
- memberships (clubs, organizations, and churches), and
- address or applicable legal jurisdiction referenced within legal documents.
While no single factor is decisive, the goal should be to have as many of these factors as possible point to your new state.
There is a strong presumption that spouses maintain residency in the same state unless they are legally separated or going through a divorce. There is an exception for military families where one or both spouses are living in a state solely due military orders/their employment with the military.
It is also worth noting what Minnesota does not consider. For example, charitable donations and the location of your professional advisors (such as accountants or lawyers) are no longer factored into the analysis. This allows individuals to keep longstanding relationships with their advisors in Minnesota even after relocating.
Actions Matter More Than Words for Minnesota Residency
Declaring “I live in Florida now” is not enough. Minnesota courts and auditors look at the objective record. For example, even couples who sold their Minnesota home and traveled in an RV were still deemed Minnesota residents because they had not established a permanent base in another state. To avoid this outcome, it is critical (1) to cut ties with Minnesota and (2) to establish meaningful connections elsewhere.
Practical Suggestions for Changing Residency Outside of Minnesota
If your goal is to establish residency outside of Minnesota, you should consider the following action items:
- Spend 183 days or more in the new state of residency each year;
- Maintain a home in your new state that is suitable for year-round use;
- Build as many personal, financial, and social ties to your new state as possible; and
- Keep thorough records of your time and activities.
Changing residency is not about finding a loophole. It is about genuinely making another state your permanent home and being able to prove it if questioned. If you face a residency audit or are unsure whether your situation meets Minnesota’s standards, we encourage you to seek guidance from the Trusts & Estates attorneys at Fafinski Mark & Johnson, P.A. We are here to help with residency planning, tax concerns, and related estate planning issues.
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