Wills, Trusts & Estates Prof Blog

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

Tuesday, January 22, 2019

U.S. Supreme Court to Hear Key Income Tax Issue for $120 Billion Trust Industry

CourtThe highest court of the country has granted certiorari to a tax case that has serious implications for states and trusts beneficiaries. The issue within North Carolina Department of Revenue v. the Kimberley Rice Kaestner 1992 Family Trust is: Does the due process clause prohibit states from taxing trusts based on trust beneficiaries’ in-state residency?

The ongoing controversy can be seen as premier matter concerning estate planning. Steve Akers, an estate lawyer with Bessemer Trust, posed the question a different way at the Heckerling conference: “Can a state tax a trust located in another state? What are minimum contacts?” The split among the states is close: five states say no, four states say yes.

Almost every state taxes trust income, and 11 of them tax trusts based on trust beneficiaries in-state residency - including Minnesota and North Carolina that have had cases decided in their supreme courts within the last year. A great number of trusts are awaiting the outcome of this decision by the United States Supreme Court.

See Ashlea Ebeling, U.S. Supreme Court to Hear Key Income Tax Issue for $120 Billion Trust Industry, Forbes, January 16, 2019.

Special thanks to Paul M. Cathcart (Hemenway & Barnes, LLP, Boston, MA) for bringing this article to my attention.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2019/01/us-supreme-court-to-hear-key-income-tax-issue-for-120-billion-trust-industry.html

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