A NING Trust or a DING Trust could provide substantial state income tax savings, as well as provide excellent asset protection and estate planning. A NING Trust is a Nevada Incomplete Non-Grantor Trust. A DING Trust is a Delaware Incomplete Non-Grantor Trust. Either way, the purpose of a NING Trust OR DING Trust is to avoid state income tax. These trusts can also be used for asset protection, estate tax planning, inheritance planning, etc.
Consider the following examples:
- A Utah resident establishes a NING trust and contributes stock in a private company worth $100,000,000. The company is sold and the proceeds are paid to the NING Trust. The client pays federal tax but no state tax, saving the client $5,000,000 (Utah’s 5% income tax). The trustee of the NING Trust distributes all of the sale proceeds to a Utah resident and no state tax is due because Utah does not tax a distribution of capital gains from a non-resident trust.
- A California resident establishes a properly structured NING trust and contributes a $20 million stock portfolio that produces 8% taxable income per year. Over a period of 10 years, the California income tax saved could be $2,500,000. Over 20 years, the compounded savings from not paying California income tax could be $8,500,000. (See Gordon Schaller & The 13.3% Solution: of DINGs, NINGs, WINGs and Other ThINGs, LISI Estate Planning Newsletter #2191 (February 5, 2014)).
- A California resident establishes a NING Trust and contributes a stock portfolio worth $10,000,000. The trust earns income of $500,000 per year. The client lives on other sources of income and allows the trust income to accumulate free of California state income taxes. The annual state tax savings from the NING Trust are $66,500 per year. The assets of the NING trust are protected from creditors, divorces, and all types of liabilities. The client then retires and moves to Florida where trust distributions can be received without state tax (Florida has no state income tax).
The IRS has ruled privately on this strategy. Click HERE for more info.
Why should you trust McCullough Sparks to create your NING Trust?
McCullough Sparks has created more NING Trusts over a longer period of time. We have created several NING Trusts with over $100,000,000 in assets. These high net worth NING Trusts receive extensive review from the best legal and accounting professionals. We have developed Nevada trustee relationships that offer more options, greater flexibility, better service and lower fees for our clients.