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