1. Location of trust origination, 2. Final residence of grantor, or 3. Location of trustees .
Family trust- My father passed away (second death grantor) in March 2013. The trust was created in CA in 1980s where he lived, but his last 7 years and death occurred in NM. The trustees (sister and myself) live in CA and NM respectively.
Also, what are the ramifications of the decision, i.e. paying trust taxes to the appropriate state? If the location is CA, does that mean we pay 2013 income taxes to CA even though he lived in NM?
Estate Planning Attorney
California has a very complicated system of fiduciary (trust) income tax. Taxation is based both on the residence of the trustees and the residence of the non-contingent (this has a special definition for fiduciary income tax purposes) beneficiaries. It is very important that you discuss this issue with a California attorney or CPA familiar with fiduciary income tax. You may need to discuss this with both a California attorney and CPA. This will apply regardless of the location that you use for the trust administration on the application for an EIN. The details of California fiduciary income tax are too complicated to explain briefly on this type of forum.
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Estate Planning Attorney
Typically it is the location of the Trustees. Depending on the assets of the trust, it may be liable for income tax in multiple locations, but for Federal purposes, it is where the trustee is located.
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I would strongly urge you to retain an experienced estate administration and tax lawyer in New Mexico to advise you on this matter. You will want to make sure that you are paying taxes to the appropriate state and should also be receiving advice regarding the terms of the trust document itself. Good luck to you.
This information is presented as a public service. It should not be construed to be formal legal advice nor considered to be the formation of a lawyer/client relationship. I am licensed in Connecticut and New York and my answers are based upon the law in those jurisdictions. My answer to any specific question would likely be different if I were to review a client's file and have the opportunity to interview the client. Accordingly, I strongly urge you to retain an attorney in your jurisdiction with respect to any legal matter.