Settlor’s Residency at Trust Creation Not Sufficient to Subject Trust to Pennsylvania Income Taxation Under Commerce Clause
June 23, 2014
Authored by: Kathy Sherby and Stephanie Moll
Another recent court decision has looked at the constitutionality of the State imposing state income tax on an irrevocable trust. Last year, the Court in McNeil v. Commonwealth of Pennsylvania held that Pennsylvania’s attempt to tax the McNeil trusts, whose connection to Pennsylvania was (1) the residency of the settlor at the time the trust was created and (2) the residency of the trust’s discretionary beneficiaries was an unconstitutional violation of the Commerce Clause of the United States Constitution.