The United States Supreme Court Today Applied Longstanding Diversity Of Citizenship Rule For Unincorporated Entities To Trust: Trust is Citizen Of Every State In Which Any Of Its Members Is A Citizen.

 

March 7, 2016  Cross Nadel LLC

 

The Supreme Court issued its decision today in Americold Realty Trust v. ConAgra Foods, applying the longstanding rule for citizenship of unincorporated entities for diversity purposes to a trust. The Court noted the "'doctrinal wall' between corporate and unincorporated entities" and referred to the "oft-repeated rule" that "artificial entities other than corporations" are citizens of every state in which a member resides. Concluding that members of trusts are those holding a beneficial interest in the trust, the Court concluded that a trust is a citizen (for diversity purposes) of every state in which any of its members is a citizen.

 

Although the decision applies existing diversity citizenship analysis to trusts and does not, therefore, necessarily create new law, it is helpful to remember that trusts, like other unincorporated entities (such as LLCs) that we sometimes think of as interchangeable with corporations, will require a more complicated analysis for diversity of citizenship purposes than a corporation. Whereas, a corporation is a citizen of the states in which it is incorporated and where it has its principal place of business, information which is typically pubicly available, trusts, LLCs and other unincorporated entities, require investigation into who all owners/members/beneficial owners are before filing suit in federal court based on diversity of citizenship.

 

 

 

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