Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, June 9, 2017

Tax Refunds for Trusts With Minnesota Grantors? Minnesota Trust Income Tax Statute Ruled Unconstitutional

MinnesotaBased on a Minnesota Tax Court ruling, certain irrevocable trusts created by Minnesota residents after 1995 may be able to claim income tax refunds. Under Minnesota law, a resident trust pays taxes to Minnesota on 100% of its intangible assets. Minnesota’s definition of a resident trust is based solely on the settlor having a Minnesota domicile at the time the trust becomes irrevocable. The Minnesota Tax Court held this statute unconstitutional. The court looked at trusts that had beneficiaries located both inside and outside the state and trustees located outside the state. These facts were among a number of factors that influenced the court’s final decision. The tax court held that these trusts were not resident trusts and therefore, the intangible assets of the trusts were not taxable by the state. The Department of Revenue is expected to appeal the decision to the Minnesota Supreme Court.

See Laura S. Carlson & Walter A. Pickhardt, Tax Refunds for Trusts With Minnesota Grantors? Minnesota Trust Income Tax Statute Ruled Unconstitutional, Faegre Baker Daniels, June 7, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

http://lawprofessors.typepad.com/trusts_estates_prof/2017/06/tax-refunds-for-trusts-with-minnesota-grantors-minnesota-trust-income-tax-statute-ruled-unconstituti.html

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