Trusts and Estates
Ca. Trs. & Estates Quarterly 2014, Volume 20, Issue 2
Content
- Bringing Beneficiaries To the Mediation Table: Drafting Enforceable Trust Provisions Requiring Mediation of Disputes During Post-death Trust Administration
- Qualifying As a Trade or Business Under the Final Net Investment Income Tax Regulations
- Two Easy Ways To Trigger a No Contest Clause By Accident
- California Income Tax Issues For Non-california Trusts - Part 2
CALIFORNIA INCOME TAX ISSUES FOR NON-CALIFORNIA TRUSTS – PART 2
By Matthew G. Brown, Esq., David L. Keligian, Esq., and Gregory E. Lambourne, Esq.*
I. INTRODUCTION
The blessing by the Internal Revenue Service (IRS) of irrevocable incomplete-gift nongrantor (ING Trusts) in Private Letter Rulings ("PLRs") 201310002-201310006 and others1 potentially revives such trusts as a viable state income tax planning tool. However, planners making use of this strategy must pay careful attention to California’s unparalleled statutory reach specifically designed to trap and/or claw back tax revenue on trust income.
In Part 1 of this two-part article (published in Volume 19, Issue 4), we reviewed California’s broad power to tax trusts with California-source income or resident fiduciaries, including trustees, advisors, protectors, and others with power to direct the trustee or control trust property.