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HF940 (Legislative Session 94 (2025-2026))

Income tax; definition of resident trust modified.

Related bill: SF6

AI Generated Summary

The bill, authored by Davids and referred to the Committee on Taxes, proposes amendments to the definition of "resident trust" within Minnesota's taxation laws, specifically revising Minnesota Statutes 2024 section 290.01 subdivision 7b. Here's a simplified breakdown of the proposed changes:

  1. Definition of Resident Trust Before 1995:

    • A trust is considered a resident trust if it became irrevocable or was first administered in Minnesota on or before December 31, 1995, and two or more of the following conditions are met:
      • The majority of discretionary decisions regarding the investment of trust assets are made in Minnesota.
      • The majority of decisions regarding distributions of trust income and principal are made in Minnesota.
      • The official records of the trust are located in Minnesota.

  2. Definition of Resident Trust After 1995:

    • A trust is considered a resident trust if it became irrevocable or was first administered in Minnesota after December 31, 1995, and the following criteria are satisfied:
      • It was created by the will of a person domiciled in Minnesota at their time of death, or it is an irrevocable trust whose grantor was domiciled in Minnesota when the trust became irrevocable.
      • At least two of the following conditions are met (similar to the first scenario):
      • Majority of investment and discretionary decisions are made in Minnesota.
      • The official records of the trust are kept in Minnesota.

  3. Additional Notes on Trusts:

    • A trust is considered irrevocable to the extent that the grantor is not treated as the owner under certain sections of the Internal Revenue Code.
    • The amendments clarify that if trust decisions are delegated to an agent or custodian, these do not count toward determining if the trust is administered in Minnesota, provided the trustees retain the power to revoke the delegation and regularly monitor the agent’s or custodian’s performance.

In essence, the bill clarifies and specifies the conditions under which a trust is considered a resident trust for taxation purposes in Minnesota, with distinct guidelines based on whether the trust was established before or after December 31, 1995.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 16, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on conditions for trusts becoming irrevocable and the administration criteria in Minnesota."
      ],
      "removed": [
        "The previous distinction for trusts that became irrevocable before or after a specific date was streamlined."
      ],
      "summary": "The bill modifies the definition of resident trust under Minnesota Statutes section 290.01, subdivision 7b.",
      "modified": [
        "The criteria and conditions for a trust to be considered a resident trust are expanded and clarified."
      ]
    },
    "citation": "290.01"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References sections 671 to 678 of the Internal Revenue Code concerning grantor type trusts.",
      "modified": []
    },
    "citation": "671 to 678 of the Internal Revenue Code"
  }
]

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