Bloomberg Interviews Michael Barker on Supreme Court’s Kaestner Decision

July 2, 2019

Bloomberg Law sought out the insights of McGuireWoods partner Michael Barker in a June 24 story on effects the U.S. Supreme Court’s decision in North Carolina Department of Taxation v. Kaestner will have on estate planning.

A unanimous court ruled June 21 that a trust beneficiary’s North Carolina residency alone is an insufficient connection for the state to tax the trust. North Carolina was determined to have an insufficient nexus for constitutional purposes to tax the income, the court’s narrow opinion said.

Barker, a trusts and estates lawyer in McGuireWoods’ Private Wealth Services Department, told Bloomberg that the opinion goes “out of its way” to underscore its limited scope. “The opinion makes clear that it’s only applying to trusts where the beneficiary is not receiving distributions, has no right to receive distributions, and may never get them,” he said.

Barker said practitioners should exercise caution in predicting what the ruling might mean for other cases.

“All this case does is give us rules in North Carolina,” he said.