April 19, 2019
Bloomberg Law turned to McGuireWoods trusts and estates partners Andrea Chomakos and Michael Barker for context and insight in covering U.S. Supreme Court oral arguments on April 16 in a case with nationwide implications for estate planning.
At issue in North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust is whether the residency of a trust beneficiary in a state is enough of a connection for the state to tax the trust.
Ms. Kaestner’s father created the trust in New York in 1992. North Carolina taxed the trust on income it earned from 2005 to 2008, even though the money wasn’t generated in North Carolina or distributed to the Kaestner children.
Barker told Bloomberg that no matter how the court rules, tracking beneficiaries who move from a state where a trust is located to other states will remain a challenge for trustees.
“Trustees are going to continue to have a big job on their hands in watching where all of the beneficiaries go and what each of those jurisdictions have to say,” he said.
Chomakos, who attended the arguments, told Bloomberg she was surprised that much of the questioning by the justices seemed not to focus on the constitutional question at the heart of the case.