The North Carolina Supreme Court recently held that the presence in the state of a trust’s beneficiary is not sufficient to establish income tax nexus for the trust. In the Kimberly Rice Kaestner 1992 Family Trust case, the trust’s beneficiaries were residents of North Carolina. There were no other connections between the state and the trust. The court held that the trust did not have sufficient minimum connections with the state of North Carolina to satisfy the due process requirements of the US Constitution and the equivalent due process requirements of the Constitution of North Carolina. The court emphasized that a trust is a separate and distinct entity from its beneficiaries, and a trust’s connections with the state are what matters for determining whether the tax violates due process. The court reasoned that the beneficiaries’ residency in North Carolina cannot be viewed as the trust conducting purposeful activities in the state because the trust and its beneficiaries are separate legal entities. Kimberley Rice Kaestner 1992 Family Trust v. N.C. Dep’t of Revenue, No. 307PA15-2 (N.C., June 8, 2018).