Nevada Incomplete Gift Non-Grantor Trust (NING) Case Study

Meet Anna

  • Anna worked for a technology company in San Francisco and purchased shares of their stock over her career. The stock has gone public, and Anna has $10M in the company’s stock.
  • Anna wants to sell the stock, but she is upset about her potential tax bill. She is in the 39.6% federal tax bracket and will have to pay 13.3% in California state income tax on the sale of the stock.

How can Anna sell her stock and potentially avoid California state income tax?
  • Anna’s attorney creates a Nevada Incomplete Gift Non-Grantor Trust (NING), and Anna transfers the stock into the trust. Nevada has no state income tax.
  • IconTrust as the Nevada trustee sells the stock and reinvests the capital with Anna’s preferred financial professional.
  • Anna has potentially avoided $1,330,000 in California state income taxes.

Players in the NING strategy:
  • Anna is the grantor. Her role is to transfer the stock into the NING.
  • IconTrust is the administrative trustee to handle the books and records for the trust.
  • A Distribution Committee is required for a NING trust. The distribution committee is made up of at least three adverse parties (beneficiaries). These parties would direct IconTrust on distributions to the beneficiaries. A majority with grantor consent is required to make a distribution.
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