Avoiding Massachusetts Taxation After the Bank of America Case: What Works and What Doesn’t Work

Publication Name: 

Avoiding Massachusetts Taxation After the Bank of America Case: What Works and What Doesn’t Work 

Date: 
Tuesday, December 6, 2016

 

Massachusetts families of means often establish trusts with Massachusetts resident fiduciaries for the benefit of unborn and unascertained beneficiaries. Later, some of these families leave Massachusetts and reestablish themselves as domiciliaries and residents of other states or even foreign countries. Their unborn children and unascertained beneficiaries may never become Massachusetts residents. Under Massachusetts law, however, an irrevocable intervivos trust with a Massachusetts resident trustee must generally pay taxes on income accumulated for the benefit of these “unborn and unascertained” trust beneficiaries. Families who leave Massachusetts often think it unfair that their trust has to pay income taxes to Massachusetts on income accumulated for the benefit of these out-of-state beneficiaries.

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