On January 11, 2019, the United States Supreme Court granted
certiorari in North Carolina Department of Revenue v.
The Kimberly Rice Kaestner 1992 Family Trust
("Kaestner"). The question raised by
Kaestner is whether the Due Process Clause prohibits a
state from taxing the income of a trust when the trust's only
connection with the state is a beneficiary residing in the state.
In addition to having a direct impact on trusts nationwide, this
case will be the first Supreme Court case to consider nexus after
Wayfair.
Background
On June 8, 2018, the North Carolina Supreme Court issued its
opinion in Kaestner.1 The decision addressed
whether the North Carolina Department of Revenue properly taxed the
income of the plaintiff trust under North Carolina General Statute
section 105-160.2, solely on the basis of a beneficiary's
residency in North Carolina during the tax years at issue. The
North Carolina Supreme Court applied the International
Shoe minimum contacts test,
