The Issue of Domicile

By Shawn R. Loring, Esq #76442; CM #13

Recently, a new domicile issue came to the attention of the Escapees RV Club. Some Escapees members who have Scottrade investment accounts received a letter from Scottrade stating that it would not accept the Escapees mail service addresses as valid permanent addresses, presenting these members with a choice:

It is important to note, that other financial institutions have sent similar letters with like ultimatums to Escapees. Some RVers may be tempted to supply these financial institutions and investment companies with an address that is not truly their legal address merely to satisfy these companies’ requests. However, by claiming connections to addresses that are not their primary places of residence, RVers risk having entities such as courts of law use the addresses that RVers provided to financial institutions as their actual addresses, and this could change their domicile and create the issues noted above.

Because RVers have wheels under their homes and travel extensively from state to state, and sometimes from country to country, they face a unique set of legal issues. Domicile issues are amongst the most common, and complex, of the problems RVers face. While there is no universally accepted definition of the term “domicile” used and mutually accepted by all of the states, “domicile” is conceptually defined as the place to which a person intends to permanently return. For part-time RVers, living the dream of RVing includes spending some time in a brick and mortar home, which may answer the question of where they intend to permanently return. However, for full-time RVers, the question of where they are domiciled can be a difficult one to answer, and it impacts many aspects of their lives. The unresolved issue of where RVers are domiciled could significantly affect their tax liabilities, the effectiveness of their estate planning documents and the state in which they are legally allowed to vote and register their vehicles. These challenges represent a sample of the more common issues.

Scottrade and these other financial institutions are forcing the resolution of issue of domicile with RVers because they have been obliged to respond to the Financial Industry Regulatory Authority (FINRA) regulation* that requires broker dealers and investment companies to know their customers and the sources of the funds in their customers’ investment accounts. The intention is that this information will curb criminal activity by showing and giving the opportunity to eliminate times when a company or person could be financially supporting terrorist cells and/or other criminal actions. (The Financial Industry Regulatory Authority [FINRA] is the largest independent regulator for all securities firms doing business in the United States.) The FINRA regulation reads as follows:

_The minimum identifying information that must be obtained from each customer prior to opening an account is (amongst other items) an address, which will be: For an individual who does not have a residential or business street address…the residential or business street address of a next of kin or another contact individual…

_The initial and incorrect interpretation of this FINRA regulation by financial institutions resulted in a requirement that their customers provide a permanent physical address, which full-time RVers cannot always do. Upon closer inspection of the regulation, I discovered, and Scottrade agreed, that customers could supply an alternate address, instead of providing their own permanent physical address, and still comply with the regulation. The problem, therefore, has been resolved.

However, it is important to be aware of the correct wording contained within the regulation, as it represents an important exception that greatly benefits RVers. Should RVers be required to supply a financial institution or an investment company with an address, this exception will enable RVers to continue to use the Escapees mail service as their mailing address, while maintaining domicile within a chosen state.

It is vitally important that financial institutions and investment companies record RVers’ addresses in a manner that does not state or imply that RVers are domiciled in a state different from their actual, intended states of domicile. Any lack of clarity regarding RVers’ states of domicile could expose RVers to tax liabilities, as well as create some of the other domicile problems listed above. In short, the recordation of RVers’ mail service address must be listed as their personal, legal address, with all correspondence directed to the mail service address. The alternate address, authorized by the FINRA regulation, must be correctly identified and recorded as the address of RVers’ “next of kin or another contact individual.” Making these distinctions could nullify significant domicile issues.

I have spoken with senior management of the Escapees RV Club and they are committed to dedicating their resources to ensure that you, as RVers, will not be adversely affected by these issues. If you are met with resistance from these entities, please contact Escapees RV Club at 888-757-2582 and ask for Teresa Moore. We will happily work with you to resolve the challenges you might encounter.

Shawn is a partner in McClendon & Loring, Attorneys at Law, PLLC, and is licensed to practice law in California and Texas. In addition, Shawn is also the CEO of Generations Financial Services, LLC.