The successor trustee does not have to live in the same state as you do. But if you are choosing between someone local and someone far away, think about how convenient it will be for the person you choose to distribute the living trust property after your death.
Where does a trust reside?
Trusts can reside in many jurisdictions simultaneously depending on the location of the trust income producing assets, the location of the trustee, or the location of the beneficiaries. This can lead to tax oversight, legal consequences, and significant challenges.
Who pays capital gains tax on a trust?
Capital gains are not income to irrevocable trusts. They’re contributions to corpus – the initial assets that funded the trust. Therefore, if your simple irrevocable trust sells a home you transferred into it, the capital gains would not be distributed and the trust would have to pay taxes on the profit.
What determines the jurisdiction of a trust?
Generally, we can determine a court’s jurisdiction over a trust matter by analyzing the following factors: (1) the presence of an agreement of the contracting parties; (2) the administrative situs of the trust; (3) state statutory authority; and (4) timely commencement of litigation.
What assets should not be included in a living trust?
Assets that should not be used to fund your living trust include:
- Qualified retirement accounts – 401ks, IRAs, 403(b)s, qualified annuities.
- Health saving accounts (HSAs)
- Medical saving accounts (MSAs)
- Uniform Transfers to Minors (UTMAs)
- Uniform Gifts to Minors (UGMAs)
- Life insurance.
- Motor vehicles.
Does a trust have a jurisdiction?
Unlike a contract, in the case of a trust the Court has an inherent jurisdiction to supervise the administration of the trust.
Can you change the situs of a trust?
A backdoor way to modifying an irrevocable trust might be through a change in the situs of the trust’s administration. Some trust instruments permit the trustee to move the situs of the trust to another jurisdiction and then adopt the laws of that new jurisdiction for purposes of trust administration.
