With President Trump’s recent immigration reforms impacting the domiciliary status of many New York residents, estate trust administrators are faced with changes to the taxable status of those asset transfers. New York Consolidated Laws, Estates, Powers and Trusts Law (EPTL) applies specific rules to asset transfer procedure when there is a change in domiciliary of a trust holder. The federal Internal Revenue Service (IRS) provides fiduciary income taxation rules for U.S. residents with foreign income (I.R.C. §§ 1, 61), estates, and generation skipping asset transfers (I.R.C. §§ 2001, 2031-2046, 2601). Non-U.S. residents are subject to U.S. income tax from income sourced solely in the country, and are subject to taxation of estate, gift and generation skipping transfer of U.S. situs assets.
New York Rules to Domiciliary
In New York, trust asset transfer falls under three (3) categories of domiciliary: 1) resident, 2) nonresident, and 3) exempt resident.