“The Non-Grantor Trust State Income Tax Chart is an easy-to-use summary that should open up opportunities for practitioners to save state income tax for their clients both with newly-created non-grantor trusts and by moving and fixing any existing non-grantor trusts that are needlessly paying state income tax and therefore dragging down the trust’s asset base. The new $10,000 state and local tax deduction limitation magnifies this problem, thereby bringing state income tax planning into the spotlight.”
Frequent LISI contributor Steve Oshins, Esq., AEP (Distinguished) authors three different annual state rankings charts and one state income tax chart:
· The Annual Domestic Asset Protection Trust State Rankings Chart
· The Annual Dynasty Trust State Rankings Chart
· The Annual Trust Decanting State Rankings Chart
· The Annual Non-Grantor Trust State Income Tax Chart
Members should look for Steve’s upcoming LISI webinar on Friday, August 3rd titled “Growing Your Firm’s Revenue Using the Non-Grantor Trust State Income Tax Chart.” For more information or to register, please click this link: Steve Oshins
Click this link to read Steve’s commentary.
EXECUTIVE SUMMARY:
I. “Resident Trust” Definition
Different states have different rules as to what creates a “resident trust” that is subject to taxation in that state. States may tax a trust based on the residency of the settlor or testator, based on whether there is a resident trustee or beneficiary or whether there is administration in that state, or for a combination of these factors and/or other similar factors.
So it isn’t as easy as simply situsing a trust in a state with no state income tax. You have to look at the state taxing statutes that may apply.
II. The Chart as a Resource for Advisors
The Non-Grantor Trust State Income Tax Chart simplifies this analysis by summarizing each state’s taxing rules and providing a hyperlink to the applicable taxing statutes. The Chart was created not only to be a resource to practitioners and clients, but also to create opportunities for them.
One focus of this Chart is to determine whether a trust can be moved to another state in order to save state income tax. Another focus is to determine who to avoid using as trustees, in which states to avoid trust administration, as well as other variables that may unnecessarily cause a state income tax.
No trust should ever be created without the advisor knowing the residency of the settlor, the proposed trustees and the beneficiaries. This information is invaluable in the planning process since it can have a substantial influence on certain decision points.
Thus, each advisor should have a handy resource to use to quickly access the different state rules in order to be able to properly plan for their clients.
Steven J. Oshins, Esq., AEP (Distinguished) is an attorney at the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada, with clients throughout the United States. He is listed in The Best Lawyers in America®. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011 and was named one of the 24 Elite Estate Planning Attorneys in America by the Trust Advisor. He has authored many of the most valuable estate planning and asset protection laws that have been enacted in Nevada. He can be reached at 702-341-6000, ext. 2, at soshins@oshins.com or at his firm’s website,www.oshins.com
