facebook linkedin twitter

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.

In The News

Health

Voting

Supreme Court

Mississippi Argues Supreme Court Should Overturn Roe v. Wade

JACKSON, Miss. (AP) — The U.S. Supreme Court should overturn its landmark 1973 ruling that legalized abortion nationwide and let... Read More

JACKSON, Miss. (AP) — The U.S. Supreme Court should overturn its landmark 1973 ruling that legalized abortion nationwide and let states decide whether to regulate abortion before a fetus can survive outside the womb, the office of Mississippi's Republican attorney general argued in papers filed Thursday... Read More

July 6, 2021
by Tom Ramstack
Supreme Court Agrees to Hear Deaf Woman’s Emotional Distress Suit

WASHINGTON -- The U.S. Supreme Court plans to hear a case in its next term that could expand rights of... Read More

WASHINGTON -- The U.S. Supreme Court plans to hear a case in its next term that could expand rights of discrimination victims to collect compensation for "emotional distress." A ruling that allows the compensation could widely broaden the liability for discrimination, potentially allowing anyone victimized by... Read More

July 1, 2021
by Dan McCue
Supreme Court Strikes Down Disclosure Rules for Political Donors

WASHINGTON - The Supreme Court on Thursday struck down a California law that required nonprofits to disclose lists of their... Read More

WASHINGTON - The Supreme Court on Thursday struck down a California law that required nonprofits to disclose lists of their biggest donors, holding the requirement burdened donors’ First Amendment rights and was not narrowly tailored to an important government interest. In a 6-3 ruling authored by... Read More

July 1, 2021
by Dan McCue
Supreme Court Upholds Arizona Voting Restrictions

WASHINGTON - The Supreme Court ruled Thursday to uphold two provisions of Arizona’s election law that critics argued unfairly impinged... Read More

WASHINGTON - The Supreme Court ruled Thursday to uphold two provisions of Arizona’s election law that critics argued unfairly impinged on the rights of Black, Hispanic and Native Americans voters. By a 6-3 margin, the justices held that a 2016 law that limits who can return... Read More

June 29, 2021
by Dan McCue
Pipeline Company Can Use Eminent Domain to Claim State Land

WASHINGTON — The Supreme Court ruled Tuesday a company building a natural gas pipeline in New Jersey can continue to... Read More

WASHINGTON — The Supreme Court ruled Tuesday a company building a natural gas pipeline in New Jersey can continue to rely on eminent domain to claim state land in its path. The 5-4 ruling by the court included both liberal and conservative members of the court... Read More

Transgender Rights, Religion Among Cases Justices Could Add

WASHINGTON (AP) — A closely watched voting rights dispute from Arizona is among five cases standing between the Supreme Court... Read More

WASHINGTON (AP) — A closely watched voting rights dispute from Arizona is among five cases standing between the Supreme Court and its summer break. But even before the justices wrap up their work, likely later this week, they could say whether they'll add more high-profile issues... Read More

News From The Well
scroll top