Bill would redefine when a trust is a Minnesota resident trust; fiscal estimates cited

Senate File 6, presented by Senator Rest, would clarify when a trust is treated as a Minnesota resident trust for income‑tax purposes. The bill proposes objective factors — including where trustees make a majority of discretionary investment or distribution decisions and where records and meetings are located — and uses December 31, 1995, as a determinative date in distinguishing certain trust types.

Senator Rest said the measure responds to longstanding uncertainty about residency for trusts and would reduce reliance on an open-ended “minimum contacts” standard. The bill's language requires two of three factors (investment decisions, distribution decisions, records/meetings/accounts location) to be met to establish Minnesota residency for pre‑1996 trusts; similar tests apply to trusts that became irrevocable on or after Dec. 31, 1995.

Testimony from Michael Sampson, an attorney representing trust clients, said the change would allow taxpayers and practitioners to read the statute and determine filing obligations without needing constitutional or case‑law analysis. Sampson said the current uncertainty favors the department and makes preparation costly; objective statutory factors would “make it possible to decide, do I need to file or not?”

Senator Rest cited the department’s revenue estimate included in the hearing record, noting a projected revenue loss of roughly $4.7 million in the first year and an $11 million biennial estimate. Committee members asked how interstate conflicts would be resolved; Sampson explained state tax credits for taxes paid to another state typically prevent double taxation.

Senate File 6 was laid over for possible inclusion.