SCOTUSblog by Erin Scharff 6/22/2019
Opinion analysis: Presence of in-state beneficiaries alone insufficient for state to assert jurisdiction to tax trust incomeIn a unanimous opinion, the Supreme Court on Friday held that North Carolina’s efforts to tax the income of a trust based on the trust beneficiary’s residence in the state violated the Constitution’s due process clause.
The case arose when North Carolina attempted to tax the income earned by the Kimberley Rice Kaestner 1992 Family Trust from 2005 to 2008. During this period, the Kaestner trust’s beneficiaries were all residents of North Carolina, but the trust’s grantor was a resident of New York, and the trust was governed by New York law, where its documents and records were kept. The trust’s asset custodians were in Massachusetts. At no point during the relevant tax period was the trustee a North Carolina resident. Moreover, the trust earned no income in North Carolina.
The trust alleged that North Carolina’s imposition of its tax violated the due process clause because the trust lacked the necessary minimum contacts with the state. North Carolina argued that the presence of in-state beneficiaries was sufficient to satisfy the minimum-contacts requirement under the court’s modern jurisprudence.
More:
https://www.scotusblog.com/2019/06/opinion-analysis-presence-of-in-state-beneficiaries-alone-insufficient-for-state-to-assert-jurisdiction-to-tax-trust-income/#more-287181
