The state was attempting to collect tax without consideration for residency.
A tax court has decided that Minnesota’s trust taxation is unconstitutional, according to the Wills, Trusts & Estates Prof Blog in "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional."
Minnesota’s income tax statute makes 100% of a trust's assets taxable in that state, if the trust became irrevocable when the settlor was a resident of Minnesota.
This rule applies regardless of where the trust beneficiaries reside or where any trustees reside.
The court looked at trusts that had an out-of-state trustee, beneficiaries who lived in Minnesota and beneficiaries who lived in other states.
It determined that these trusts could not be considered resident trusts of Minnesota and, therefore, the state could not tax intangible assets. Presumably, the same logic could be applied to some other trust situations.
This ruling could lead to refunds for some trusts.
However, it appears likely that Minnesota will appeal to the Supreme Court.
Reference: Wills, Trusts & Estates Prof Blog (June 7, 2017) "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional."