SCOTUS Case Preview: Due Process and Trusts

April 12, 2019 by Dan McCue

This is one of five noteworthy Supreme Court cases that will be heard between April 16 and April 23. You can read the other previews here:

The second case the justices will hear on the 16th, North Carolina Department of Revenue v. the Kimberley Rice Kaestner 1992 Family Trust, also has big money implications.

The question before the high court will be whether the Due Process Clause of the 14th Amendment prohibits states from taxing trusts based on the in-state residency of trust beneficiaries.

The rights and responsibilities related to hundreds of millions of dollars of annual tax revenue hang on the justices’ decision.

In 1992, Joseph L. Rice III, co-founder of Clayton, Dubilier & Rice, one of the oldest private equity investment firms in the world, established a trust in New York, naming William Matteson as trustee and Rice’s descendants as the primary beneficiaries.

Ten years later, the original Trust was divided into three separate trusts, one for each of Rice’s children.

One of those children, a daughter, Kimberley Rice Kaestner, lived in North Carolina at the time.

In 2005, Matteson stepped down as trustee for the three trusts and Rice appointed a successor trustee, who resided in Connecticut. Over the next four years, the Kimberley Rice Kaestner 1992 Family Trust, paid state income taxes in North Carolina, despite the fact no funds were distributed,

In 2009, representatives of the trust sought a refund of those income taxes. When the state Department of Revenue rejected that claim, the trust sued, asking the court to declare a state statute enabling the North Carolina to collect taxes from the family insisted was a “foreign trust,” created and domiciled in another state.

The court granted the states motion to dismiss the trust’s claim for a refund of the taxes paid, but allowed the litigation over the constitutional claim to continue, and ultimately found for the trust. The department promptly appealed.

A state appeals court later found that the mere fact that a beneficiary of the trust lives in North Carolina was not sufficient enough to establish that state’s right to tax proceeds for it.

In coming to that decision, the state appeals court noted the trust location, its assets, and its trustee are all outside of the state. The North Carolina Supreme Court later affirmed the decision, prompting the appeal to the U.S. Supreme Court.

The case is 18-457 North Carolina Dept. of Revenue v. Kaestner Family Trust.

Supreme Court

Supreme Court Justice Ruth Bader Ginsburg Dies at 87
Supreme Court
Supreme Court Justice Ruth Bader Ginsburg Dies at 87

WASHINGTON (AP) — Supreme Court Justice Ruth Bader Ginsburg, a diminutive yet towering women’s rights champion who became the court’s second female justice, died Friday at her home in Washington. She was 87. Ginsburg died of complications from metastatic pancreatic cancer, the court said. Ginsberg’s death... Read More

Supreme Court To Start New Term By Telephone
Supreme Court
Supreme Court To Start New Term By Telephone
September 17, 2020
by Dan McCue

WASHINGTON - The Supreme Court will continue to hold oral arguments by telephone for the start of the new term in October in light of the ongoing coronavirus pandemic, a court spokeswoman said Wednesday. Kathleen Arberg of the court's public information office said in keeping with... Read More

Restaurants Say Reservation Confirmations Are Not Nuisance Robocalls
Supreme Court
Restaurants Say Reservation Confirmations Are Not Nuisance Robocalls
September 14, 2020
by Dan McCue

WASHINGTON - The Restaurant Law Center wants the Supreme Court to overturn a 9th Circuit ruling that effectively classified calls and text messages to confirm dining reservations as nuisance robocalls. The Center, an industry association representing about 1 million restaurant and food service outlets across the... Read More

Cities Urge Supreme Court to Uphold Anti-Discrimination Protections
Supreme Court
Cities Urge Supreme Court to Uphold Anti-Discrimination Protections
September 14, 2020
by Dan McCue

WASHINGTON - The U.S. Conference of Mayors and a coalition of leaders from smaller municipalities are urging the U.S. Supreme Court to uphold protections against discrimination in the delivery of government services. The court is currently scheduled to hear the case Fulton v. City of Philadelphia... Read More

Biden’s Hint on Supreme Court Nominee Sets Off Speculation on Prospective Candidates
2020 Elections
Biden’s Hint on Supreme Court Nominee Sets Off Speculation on Prospective Candidates
September 1, 2020
by Tom Ramstack

WASHINGTON -- Democratic presidential nominee Joe Biden’s recent statement during a press conference that he would nominate an African American woman to the Supreme Court if he is elected is narrowing the list to three likely nominees. Although he declined to give out the names, the... Read More

Ruth Bader Ginsburg Will Receive This Year’s Liberty Medal
Supreme Court
Ruth Bader Ginsburg Will Receive This Year’s Liberty Medal

PHILADELPHIA — Ruth Bader Ginsburg, associate justice of the Supreme Court, has been selected this year’s recipient of the Liberty Medal, the National Constitution Center announced Wednesday. According to Jeffrey Rosen, head of the NCC, Ginsburg will be the subject of a special video tribute in... Read More

News From The Well
scroll top