SCOTUS Kaestner Ruling on State Trust Income Taxation: Key Considerations for Trusts and Estates Counsel

In-Depth Case Analysis, Income Tax Challenges for Nonresident Trusts, Planning Techniques

Note: CPE credit is not offered on this program

A live 90-minute CLE webinar with interactive Q&A


Tuesday, October 1, 2019

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, September 6, 2019

or call 1-800-926-7926

This CLE webinar will provide trust and estate counsel with a detailed analysis of the U.S. Supreme Court's ruling in North Carolina Dept. of Revenue v. Kaestner 1992 Family Trust and its impact on trusts and estate planning. The panel will discuss key points of interest in the Court's decision, allocation of state-sourced income between trusts and beneficiaries in nonresident trusts with resident beneficiaries, fiduciary liability, and effective planning techniques in light of the Court's ruling.

Description

On June 21, 2019, in North Carolina Dept. of Revenue v. Kaestner 1992 Family Trust, the U.S. Supreme Court ruled that the presence of in-state beneficiaries alone does not empower the state to tax income accumulated in a trust. Estate and trusts counsel and accountants must understand the impact of this ruling on the complicated area of trust multi-state taxation.

State income tax treatment of trust income is often considerable and an unanticipated expense. The majority of states impose an income tax on resident trusts and state-sourced income of nonresident trusts. Calculating and reporting these expenses becomes an even more significant challenge where the trust has multistate contacts, either because of different resident states for settlors, beneficiaries or trustees or because of business operations in more than one state.

Additional complexity arises in navigating the rules determining when to allocate income to a trust as opposed to its beneficiaries, specifically when a nonresident trust has income or loss from multiple states.

Listen as our experienced panel provides a complete analysis of the Supreme Court's ruling in Kaestner and provides guidance on some of the specific challenges of multistate income taxation of nonresident trusts.

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Outline

  1. State taxation of resident trusts
  2. U.S. Supreme Court ruling in N.C. Dept. of Revenue v. Kaestner
  3. Determining whether a trust is resident or nonresident
  4. Key issues for nonresident trusts
    1. Income allocation between nongrantor trust and beneficiaries in multistate contact situations
    2. State apportionment issues for trusts holding active business income
  5. Best practices and planning steps for trust and estates counsel

Benefits

The panel will discuss these and other relevant topics:

  • How does North Carolina Department of Revenue v. Kaestner 1992 Family Trust impact residency?
  • Critical factors in determining whether a trust is resident or nonresident for state income tax purposes
  • Challenges in allocating income between a nonresident trust and its beneficiaries
  • Issues when trusts receive active business income from multiple states outside of its resident state

Faculty

Eberl, Catherine
Catherine B. Eberl

Partner
Hodgson Russ

Ms. Eberl regularly advises clients on all aspects of estate planning, including estate, gift, and fiduciary income tax...  |  Read More

Fortuna, Julian
Julian A. Fortuna

Partner
Taylor English Duma

Mr. Fortuna focuses his practice on domestic and international tax planning and tax controversy matters. His industry...  |  Read More

Lazo, Christiana
Christiana M. Lazo

Partner
Kirkland & Ellis

Ms. Lazo’s practice consists of representing ultra-high net worth individuals, their family offices, and closely...  |  Read More

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