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Either option is stated to have the potential to generate revenue of approximately $150 million annually.
Close the Resident Trust Loophole:
Under current law, a New York resident trust is not subject to tax if all three of the following conditions are met:
• All trustees are domiciled outside the State;
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• All real and tangible trust property is located outside the State; and
• All trust income and gain is derived from sources outside the State.
One option suggested by the Commission is to treat these trusts as grantor trusts for New York income tax
purposes so the trust income would be included in the taxable income of the grantor. In addition, the
Commission suggests that New York could adopt California's approach, which creates an addition modification
equal to distributions to resident beneficiaries by trusts not subject to California tax.
Impact on Revenue:
These changes would be revenue neutral because an increase in the estate tax exemption is estimated to decrease
revenues by $300 million and reinstating the gift tax and closing the resident trust loophole are each estimated to
increase revenues by $150 million.
Next Steps:
The report will be shared with the New York State Tax Relief Commission, co-Chaired by H. Carl McCall, State
University of New York Board of Trustees, Chairman and Governor George Pataki. The Tax Relief Commission
is working to help identify ways to reduce the State's property and business taxes, and will provide
recommendations for consideration in the Governor's 2014 State of the State message.
A link to the full report is:
http://www.govemormy.gov/assets/documents/greenislandandreportandappendicies.pdf.
Please feel free to call me if you wish to discuss this further.
Best regards,
Sharon
Sharon L. Klein
Managing Director of Family Office Services
& Wealth Strategies
Wilmington Trust, N.A.
New York, NY 10022
www.wilmingtontrust.com
ABOUT WILMINGTON TRUST
Wilmington Trust's Wealth Advisory offers a comprehensive array of personal trust, financial planning, fiduciary, asset
management, and family office services that help high-net-worth individuals and families grow, preserve, and transfer wealth.
Wilmington Trust has offices throughout the United States and internationally in London, Luxembourg, Frankfurt, Dublin,
Amsterdam, Cayman Islands, and Channel Islands. Wilmington Trust focuses on serving families with whom it can build long-term
relationships, many of which span multiple generations. Wilmington Trust also provides Institutional Client Services for clients
throughout the world. Wilmington Trust is an M&T company. For more information, visit www.WilmingtonTrust.com.
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