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  1. #1
    Join Date
    Oct 2006
    Posts
    16,474

    Default Trust Situs/Tax Location

    I am researching something and am having trouble finding a plain language answer. If any of the other tax pros here happen to know the answer of the top of their head, I would appreciate it. Otherwise please do not feel that you need to research anything.

    Deceased is from state A, trust was done in state A, trustee is located in state A. The beneficiaries are in state B and are minors that do not get distributions (except for educational costs if they end up going to college) until they are 25. The trust pays taxes on the trust income. The trust has always filed a state A tax return.

    Now, the Trustee is considering moving to state C. In what state should the trust file an income tax return once the Trustee has moved?

    So far my research seems to be leaning in the direction that the state for taxation and situs purposes follows the trustee, but that seems off to me. However, it also doesn't seem logical that it would go to either state B or remain in state A either.

    So, if anyone knows the answer to that question off of the top of their head, I would appreciate the info.

  2. #2
    Join Date
    Jul 2015
    Location
    Florida
    Posts
    301

    Default Re: Trust Situs/Tax Location

    A trust exists under the statutory scheme of a particular state. If it is created pursuant to the law of Florida, for example, it will be administered in accordance with Florida law regardless of where the trustee lives. If the trustee moves to Georgia, the trust does not become a Georgia trust. It is a Florida trust, and would therefore be subject to Florida taxation laws for state tax purposes. However, if the trust has income that is sourced in another state that specific income could be taxable in that state according to the laws of that state. So, for example, if a Florida trust owns a chain of gas stations in Ohio, it would certainly pay taxes in Ohio on the Ohio income. However, I can't imagine the residency of the trustee alone having that same effect. The residency of the settlor of the trust is typically of far more consequence.

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