Eliminate State Tax on Trust Income: A Comprehensive Update on Planning With Incomplete Gift Non-Grantor Trusts

Authors

Kevin R. Ghassomian

Abstract

Private letter rulings dating back to 2001 affirm various tax attributes of incomplete gift non-grantor trusts, known popularly as "DING Trusts," which have been used by taxpayers to relocate investments from high-tax states to no-tax states. In 2007, the Internal Revenue Service questioned the integrity of its rulings on the DING Trust and cast doubt on its continuing viability for tax planning purposes. After nearly six years of indecision, a flurry of favorable new rulings was released in March of 2013, restoring widespread confidence in the DING Trust as an option for taxpayers seeking relief from rising income tax rates. This article examines the DING Trust within the context of the new rulings and recent case law, suggesting structural safeguards and recommendations for most effectively employing the technique to mitigate income tax liability at state and local levels.

Recommended Citation

Ghassomian, Kevin R. (2013) "Eliminate State Tax on Trust Income: A Comprehensive Update on Planning With Incomplete Gift Non-Grantor Trusts," ACTEC Law Journal: Vol. 39: No. 3, Article 4.
Available at: https://scholarlycommons.law.hofstra.edu/acteclj/vol39/iss3/4