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Taxing Trust Income for In State Beneficiaries

November 25, 2019, by Daniel McGowan, on Appellate Practice in Probate |

The United States Supreme Court recently faced a situation involving a trust's beneficiaries who were all North Carolina residents, but the trust itself was administered in New York by trustees who were not North Carolina residents, and the trust made no distributions in the relevant period.

Justice Sotomayor authored the opinion holding that the presence of in-state beneficiaries alone does not empower a state to tax trust income that has not been distributed to the beneficiaries where the beneficiaries have no right to demand that income and are uncertain to receive it.

The Court's opinion clarified that itsĀ  holding is limited "to the specific facts presented."