HF 4650

as introduced - 91st Legislature (2019 - 2020) Posted on 05/09/2020 01:14pm

A bill for an act
relating to taxation; income; modifying criteria for determination of residency for
resident trusts; amending Minnesota Statutes 2018, section 290.01, subdivisions
7a, 7b.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 290.01, subdivision 7a, is amended to read:

Subd. 7a.

Resident estate.

Resident estate means the estate of a deceased person where
(1) the decedent was domiciled in Minnesota at the date of death new text begin and the decedent's domicile
is determined after applying the provisions in subdivision 7, paragraphs (c) and (d) new text end , or (2)
the personal representative or fiduciary was appointed by a Minnesota court in a proceeding
other than an ancillary proceeding, or (3) the administration of the estate is carried on in
Minnesota in a proceeding other than an ancillary proceeding.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after .......
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.01, subdivision 7b, is amended to read:

Subd. 7b.

Resident trust.

(a) Resident trust means a trust, except a grantor type trust,
which either (1) was created by a will of a decedent who at death was domiciled in this state
or (2) is an irrevocable trust, the grantor of which was domiciled in this state at the time the
trust became irrevocable. For the purpose of this subdivision, a trust is considered irrevocable
to the extent the grantor is not treated as the owner thereof under sections 671 to 678 of the
Internal Revenue Code. The term "grantor type trust" means a trust where the income or
gains of the trust are taxable to the grantor or others treated as substantial owners under
sections 671 to 678 of the Internal Revenue Code. This paragraph applies to trusts, except
grantor type trusts, that became irrevocable after December 31, 1995, or are first administered
in Minnesota after December 31, 1995.

(b) This paragraph applies to trusts, except grantor type trusts, that are not governed
under paragraph (a). A trust, except a grantor type trust, is a resident trust only if two or
more of the following conditions are satisfied:

(1) a majority of the discretionary decisions of the trustees relative to the investment of
trust assets are made in Minnesota;

(2) a majority of the discretionary decisions of the trustees relative to the distributions
of trust income and principal are made in Minnesota;

(3) the official books and records of the trust, consisting of the original minutes of trustee
meetings and the original trust instruments, are located in Minnesota.

(c) For purposes of paragraph (b), if the trustees delegate decisions and actions to an
agent or custodian, the actions and decisions of the agent or custodian must not be taken
into account in determining whether the trust is administered in Minnesota, if:

(1) the delegation was permitted under the trust agreement;

(2) the trustees retain the power to revoke the delegation on reasonable notice; and

(3) the trustees monitor and evaluate the performance of the agent or custodian on a
regular basis as is reasonably determined by the trustees.

new text begin (d) The following factors must not be considered by the commissioner or any court in
determining whether a trust is a resident trust:
new text end

new text begin (1) the location of the trust's attorney, certified public accountant, or financial adviser
who is not a trustee of the trust; and
new text end

new text begin (2) the place of business of a financial institution at which the trustee on behalf of the
trust applies for any new type of credit or at which the trustee on behalf of the trust opens
or maintains any type of account.
new text end

new text begin (e) The definitions under subdivision 7, paragraph (d), apply for purposes of this
subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective .......
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