In the legal sense, a person's or corporation’s domicile are the place where they have established legal residency. This could mean a state, country or otherwise and it has significant implications when interpreting specific types of laws. It is especially important when a person moves or travels or when a corporation might have holdings in more than one area. In most cases, laws applying to people are those where the domicile is located, and include laws about marriage, inheritance or businesses rights. Many criminal laws may not take into account domicile, or federal governments could have rights to override state or province laws in some instances.
No person or business has more than one legal residence at any given time, in most cases. A permanent home is permanent until such time as the person decides to establish residency elsewhere. A person with a home in Texas has this as a domicile unless he or she decides to move to another location, say New York, get rid of the Texas home, and become legally resident of New York. Note that simply visiting New York, or even living there for a short time, for example to attend school, would not change the domicile in many circumstances.
The reason this concept is so important is because in many places, laws differ. The inheritance laws in Texas and New York may not be the same. Laws about divorce in one or the other of these states could be profoundly different.
Generally, in order to take advantage of any of these laws, the question of domicile must be decided first. A married couple visiting New York but resident in Texas might decide to divorce and would have to do so by Texas laws, unless they established residency in New York first. They can’t be resident in both states, even if they own property in both states.
Domicile doesn’t necessarily mean having to own property. The idea is more abstract than that. It could mean renting an apartment, staying with friends or living in a shelter. It simply establishes that a person legally belongs to a specific area and is most subject to that area’s laws. Children, for instance, who usually don’t own property, typically have legal residency with custodial parents. Should the parents relocate and establish residency elsewhere, the children’s residential status changes too, and with that might come changes regarding children’s rights to inheritance.
For corporations, domicile can be vital, since they may most have to obey laws of a specific region, even if they operate elsewhere. Certain corporations in the US tend to cluster in states where laws are most generous toward them. Many credit card companies have their domicile in places like New Hampshire because laws there tend to be more generous. In many cases, major operations of credit companies could take place elsewhere, but maintaining legal residency in a credit card friendly state allows these companies to conduct their business in a way most beneficial to them.