Alaska has long had an advantage as a preferred state for trusts but the decline of prices in the oil industry may weaken its position.
One of the most popular trust haven states in the U.S has been Alaska as attorneys sought more friendly laws and taxes for their clients. Taxes were not the focus of Alaska to raise revenue with the state looking instead to revenue from the oil industry.
However, Alaska now faces problems on two fronts as its natural oil reserves are beginning to dwindle at the same time that oil prices are very low. This has left the state in a very large financial hole. As Forbes reports in “Embattled Oil Creates Slippery Slope For Alaskan Trusts,” the state is now considering an income tax.
The proposed income tax law does not make an exception for trusts. If it passes, any trusts administered in Alaska that make money and do not distribute it to beneficiaries would have to pay income tax. Additionally, any beneficiaries would have to pay income tax to Alaska on trust distributions whether or not the beneficiaries live in Alaska or have even ever been to the state.
Alaska’s days as a trust haven will most likely come to an end if an income tax should become law.
Reference: Forbes (Dec. 22, 2015) “Embattled Oil Creates Slippery Slope For Alaskan Trusts”
