Selecting an Out-Of-State Nursing Home

I always believed that New York had a deserved reputation of aggressively going after individuals regarding whether they have New York residency with regard to collection of its income and estate taxes.

The issue just came up in an advisory opinion issued by he The New York State Department of Taxation and Finance. It involves a situation that I expect will become more common as the Baby Boomers age and with so many children and spouses having to face the decision where to move someone who needs nursing home care: Are you taxed as a New York resident if you move into a New York nursing home for care?

The specifics involve a couple who lived in Florida, and the husband wanted to know whether the admittance of his wife to a nursing home in New York State would cause her to be considered a resident of New York for personal income tax and estate tax purposes.

His wife was born in New York City, and has been domiciled in Florida since she was 15 years old. She currently resides in Miami, where she has lived since 1981. She has owned property, and maintained a savings account in Florida. Prior to her illness, she maintained a Florida driver’s license, and her vehicles were registered in Florida. She was registered to vote in Florida. In addition, she belonged to various social clubs and organizations in Florida.

Her immediate family consists of her husband, who lives with her in Florida; a daughter who lives in New York; and another daughter who resides in Connecticut. The couple own an apartment in New York City, which they have used on occasion, and also own two apartments together with their daughter who lives in New York.

In the late 1990s, Mrs. Furman’s health began to decline, and she was diagnosed with an early stage of Alzheimer’s. At the present time, she is incompetent, in need of constant medical supervision, and needs to be placed in a nursing home. The husband is considering various nursing facilities in Florida and New York.

According to an Advisor Opinion issued by the New York State Department of Taxation and Finance Office of Tax Policy Analysis Technical Services Division (TSB-A-06(6)I Income Tax & TSB-A-06(4)M Estate Tax, August 28, 2006), to be considered a resident of New York State an individual must be domiciled in New York State or, if not domiciled in New York State, an individual must maintain a permanent place of abode in New York State for substantially all of the taxable year, and spend in the aggregate more than 183 days of the taxable year in New York State.

The husband was advised that since the wife’s presence in New York wasn’t the result of her own intent and decision but due to a physical or mental incapacity, she would remain a domiciliary of Florida during the period of time she would be in the nursing home in New York. It was further held that, in determining whether she was a resident of New York, any day spent in such facility wouldn’t be counted as a day in New York for purposes of the 183-day rule. A similar result was found for estate tax purposes.

I was delighted by the opinion. It is so nice to see that taxes don’t have to enter into the consideration of that husband or those in a similar situation. So maybe the perceived reputation of New York isn’t totally deserved.