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.


Current Affairs, Current Events, Estate Administration, Estate Planning - Generally, New Cases, Trusts | Permalink


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