Trustee for irrevocable Trust changing states

[frankharry]

Our family set up a revocable trust for my parents which became irrevocable when they both died.  I am the Trustee and was living in the state, Virginia, in which they died, but I moved to Iowa within this last year.  My sister and I are the only beneficiaries, and she lives in a different state altogether.  The Trust was set up in Virginia.  We are winding it down, and all that remains is several bank accounts.  There is nothing left tying the Trust to Virginia since I am selling my house in Virginia.  I assume I must change the address of the Trust, since its address was my home address.  

Can I change the address of the Trust to my new address in Iowa?  If so, should the date of this change be identical to the date I am using for my personal taxes?  Can I have the address change take effect at the end of the year to simplify filing?  The Virginia instructions state the fiscal year for the entity must match that given on the federal form.  Is it possible to file a part year tax return for a Trust?  I assume the Federal Trust form will be for the full year, but Virginia's tax form will show a partial year.

Thank you for any help on this.

[Hi Palms]

You should change your address to Iowa because that's where you want correspondence sent.

No need to file a partial year federal 1041 for the trust if the trust is still in existence. You can file a final federal 1041 when the trust terminates.

You can file a Virginia part year return for the trust. 

[frankharry]

It sounds like the trust must stay in Virginia until it is terminated.  It doesn't automatically move even though all individuals involved left the state.  The Trust creation documents state that it is in Virginia.  It looks like it is ok to have a Virginia trust with no current ties to the state.  I'll change the mailing address, as recommended, but still file as if the trust is based in Virginia, until it closes.  I'll see how TurboTax handles that.  I don't think I will owe Virginia tax since the income from the remaining accounts is so low.  Wouldn't I have to file full year Virginia trust returns until the trust closes?

[Hi Palms]

You might want to consult with a tax pro if it's worthwhile in terms of the amount. If there's no tax due then there's not much of a point in that.

Anyway, a trust can be decanted and the situs moved to another state. Some states still do have laws making trusts "captive" but there was a court case (or more than one) that held the practice of taxing trusts to be unconsitutional if the trust no longer had ties to the state and no state source income. FWIW...