ACTEC Fellow and Senior Trust Counsel, Dick Nenno, discusses the U.S. Supreme Court’s ruling on a case involving issues of state fiduciary income tax, North Carolina vs. Kaestner, on this ACTEC podcast. Listen to Podcast This podcast is for general information only and is not intended as an offer or solicitation for the sale of any financial product, service or other professional advice. Professional advice always requires consideration of individual circumstances.
Beware of pre-October 22, 1942 general powers of appointment.Are assets subject to a general power of appointment (GPOA) includible in the powerholder’s estate? Generally, yes.However, for trusts established before October 22, 1942, there’s an exception in which the assets subject to the GPOA aren’t necessarily includible in the estate of the powerholder.Practitioners should be aware of this as these trusts wind down.Co-authored with Emily B.
U.S. Supreme Court holds presence of resident discretionary beneficiaries does not justify North Carolina income taxation of nonresident trustee in Kaestner Trust. When determining whether a trustee of a nongrantor trust must pay a particular state’s income tax on retained ordinary income and capital gains, practitioners should resist the impulse to consult the governing-law clause in the Will or trust instrument.