Frequently there is tension between the intent of the person who created the trust (the settlor), the beneficiaries and the trustee. A recent Nebraska case is a good example of this.
Jack Fenske was an "old school" bachelor farmer in Madison County. He considered owning agricultural land as a sign of success. While he valued education, he appreciated the value of farm work even more.
One year before he died in 1998, he wrote his will. His attorney had been urging him to do so and the attorney testified that it might have been written and executed in one day. His two great nieces were to receive income for their lives but the principal ...
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SCOTUS trust taxation case
In an unanimous decision, the Supreme Court held that the mere presence of trust beneficiaries in North Carolina was not sufficient for the state to tax trust income. The decision was premised on the due process clause of the constitution. In order for a state to impose a tax, there must be some minimum connection between the state and the taxpayer.
In the case before the court it was noted that although the beneficiary resided in North Carolina, no income was paid during the years in question. The trust assets were in Massachusetts and the trustee was in New York. The beneficiary had no right to demand a distribution. The trustee had the ...
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