‘Kaestner’ Ruling May Have Only Narrow Impact on Estate Planning

The Supreme Court’s ruling in a North Carolina tax case was so fact-bound that it may have only a limited impact on estate planning and trust taxation, some tax professionals said.

The case centered around North Carolina’s taxation of the Kimberley Rice Kaestner 1992 Family Trust for over $1.3 million on income between 2005 and 2008 from the trust, which was created in New York and from which there hadn’t been any distributions.

The high court said June 21 that North Carolina couldn’t do it, because the trust’s only connection to the state—the fact that beneficiaries Kaestner and her ...