U.S. Supreme Court denies Fielding petition after Kaestner

Jul 02, 2019
Jul 02, 2019
0 min. read

On June 28, 2019, the U.S. Supreme Court denied the Minnesota Department of Revenue’s petition for writ of certiorari following the Minnesota Supreme Court’s decision in Fielding v. Commissioner of Revenue. Recall that the Minnesota Supreme Court found that the state’s grantor-domicile rule, as applied to trusts that had only “extremely tenuous” contacts with Minnesota, was unconstitutional under the Due Process Clauses of the Minnesota and U.S. Constitutions. The court had noted that the relevant Minnesota connections were to the trustee, not to the Minnesota grantor who established the trust at an earlier time.

In its Feb. 4, 2019 reply brief to the U.S. Supreme Court, the Minnesota Department of Revenue had argued that Fielding should be combined with Kaestner, a challenge to North Carolina’s tax on the undistributed income of a trust earned for the benefit of an in-state resident, because both cases involved due process issues arising from trust taxation. The U.S. Supreme Court ultimately did not combine the cases and Kaestner was decided independently on June 21, 2019. For more information on the Kaestner decision, please read our alert, U.S. Supreme Court finds in-state beneficiary inadequate for trust tax.


Although Kaestner was a narrow decision limited to the specific facts in the case, trusts and trust parties should be cognizant of Fielding and Kaestner, two cases addressing due process concerns with state trust taxation provisions. Beneficiaries, trustees and grantors should consider performing a reconciliation of the residency of those parties in order to determine whether refunds or exposure exists. Trusts should consider speaking to their tax advisers about the holdings in these cases when considering a trust’s nexus footprint.

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