- The deceased creator of the trust lived in the state at the time of death.
- The grantor of a lifetime trust lived in the state at the time the trust was created.
- The trust was administered according to the state’s trust laws.
- One of the trustees lives or does business in the state.
- One of the beneficiaries of the trust lives in the state.
Thus, consider a trust that became irrevocable under the following conditions:
- The grantor lived in one state when the trust became irrevocable.
- Two individual trustees reside in separate states from the grantor’s state.
- Two trust beneficiaries reside in two separate, different states.
The trust could then be subject to state income taxes in five different states; the amount subject to state taxation could vary depending on allocation methods used by the state’s taxing authority.
Trusts created in Texas, administered in Texas, with Texas trustees and beneficiaries face federal taxation problems. However, with an increasingly mobile population, a review of wills creating trusts and existing trusts warrant a review of conditions.
We, at Paragon Financial Advisors, assist our clients in reviewing their estate/trust planning. Paragon Financial Advisors is a fee-only registered investment advisory company located in College Station, Texas. We offer financial planning and investment management.