North Carolina Dept. of Revenue v. Kimberley Rice Kaestner 1992 Family Trust

The case asked whether North Carolina could tax a trust's undistributed income just because a beneficiary lived in the state. The Supreme Court said the Due Process Clause did not let the state do that here, because the trust had no trustee, property, or investments in North Carolina and made no distributions there during the tax years at issue.

The Court decided the case on June 21, 2019, after argument on April 16, 2019, but the prompt does not provide the vote count or opinion lineup.

The decision limits when states can tax trust income based only on a beneficiary's residence. For example, a family trust run outside a state may not owe that state's tax just because one beneficiary lives there.

The Supreme Court has finished this docket action. The practical effect is that North Carolina could not impose the tax at issue on this trust under the facts described here.

The fight was over whether North Carolina could tax a trust's undistributed income just because a beneficiary lived in the state. The trust itself had no trustee, property, or investments there.

Families, trustees, and tax agencies are affected when beneficiaries live in a different state from the trust's managers or assets. The ruling limits taxes based only on beneficiary residence.

Nothing further is scheduled in this docket at the Supreme Court. Lower courts and tax officials must apply the decision to similar disputes going forward.