Trusts and State Income Tax After Moving to Florida
How states decide where a trust lives, the New York and California rules, and moving a trust's tax home
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
A trust doesn't move to Florida when its creator does. States tax non-grantor trusts by different connections — where the grantor lived when it became irrevocable, where trustees are, where it's administered, or where beneficiaries live. A trust created by a New Yorker or Californian may stay taxable there unless its trustees, assets, and administration move too.
On this page
How states decide
| Connection | States using it (examples) |
|---|---|
| Grantor's residence at creation or irrevocability | New York, Connecticut, Pennsylvania, Illinois, Virginia, and others |
| Trustee residence | California (fiduciary), others |
| Beneficiary residence | California (non-contingent beneficiaries), Georgia, Tennessee (historically) |
| Place of administration | Several states |
New York's exempt resident trust
A trust created by a New York domiciliary is still a "resident trust" — but it owes no New York tax if it has no New York trustees, no New York real or tangible property, and no New York-source income (Tax Law §605(b)(3)(D)); New York resident beneficiaries are still taxed on accumulation distributions of income the trust accumulated in tax years beginning on or after January 1, 2014 — except income accumulated before the beneficiary became a New York resident or turned 21 (Tax Law §612(b)(40)).
California
California taxes a trust's non-California-source income in proportion to its California-resident fiduciaries and noncontingent California beneficiaries (R&TC §§17742–17744) — so Florida trustees and Florida beneficiaries remove California's claim to that income, though California-source income stays taxable whoever the trustees and beneficiaries are.
Moving the trust
Replace trustees with Florida-resident or Florida-based corporate trustees, move administration to Florida, change the governing law where the instrument permits (a situs change or decanting — under Florida law, Fla. Stat. §736.0108 lets a trustee move the principal place of administration on 60 days' notice to qualified beneficiaries, and §736.04117 is Florida's decanting statute), and remove property and source income from the former state. Grantor trusts (revocable trusts) are taxed to the grantor, so they follow the grantor's residence automatically.
Frequently asked questions
Does my trust move to Florida when I do?
A revocable trust's income follows you; an irrevocable trust's tax home depends on the former state's rules.
What is a New York exempt resident trust?
A trust created by a New York domiciliary that owes no New York tax because it has no New York trustees, property, or source income.
How does California tax trusts?
Based on its resident fiduciaries and non-contingent resident beneficiaries — plus any California-source income, wherever the trustees and beneficiaries live.
How do I move a trust's tax home?
Change trustees and administration to Florida, and remove the former state's property and source income.
Official sources
New York's fiduciary return instructions explain: “However, New York State personal income tax is not imposed on a resident trust if all three of the following conditions are met (New York State Tax Law, Article 22, § 605(b)(3)(D)). All the trustees are domiciled in a state other than New York.” — New York State Department of Taxation and Finance, 2025 Form IT-205-I, Instructions for Form IT-205, Fiduciary Income Tax Return, https://www.tax.ny.gov/forms/current-forms/it/it205i.htm
The Franchise Tax Board explains: “Although you may have connections with another state, if your stay in California is for other than a temporary or transitory purpose, you are a California resident. As a resident, your income from all sources is taxable by California.” — California Franchise Tax Board, FTB Publication 1031, 2025 Guidelines for Determining Resident Status, https://www.ftb.ca.gov/forms/2025/2025-1031-publication.pdf
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk handles trust state tax reviews after a move, fiduciary returns in the former state, and trustee and situs changes. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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