Since January 1, 1996, the State of Minnesota has taxed the income, both ordinary and capital gains, of what Minn. Stat. § 290.01, subd. 7b(a) defines as a “resident trust.” Affirming a 2017 decision of the Minnesota Tax Court, the Minnesota Supreme Court, in Fielding vs. Commissioner of Revenue (A17-1777, July 28, 2018), ruled that, as applied to the four trusts at issue in the case, Minn. Stat. § 290.01, subd. 7b(a) is unconstitutional in violation of the due process clauses of both the U.S. and Minnesota Constitutions. Although Fielding did not declare the “resident trust” statute unconstitutional on its face, it appears that, after more than 20 years, there once again is the opportunity to formulate a course of action by which at least an inter vivos irrevocable trust can affirmatively change its tax residence from Minnesota to a state, such as South Dakota, that does not levy fiduciary income tax. For further commentary, download the pdf below.