Thursday, January 9, 2014
To avoid state income taxes, wealthy Americans are moving billions of dollars in assets to trusts in Delaware, Nevada, Alaska, and other states with no state tax.
In New York and many other states, such actions are being closely monitored by state officials, as this trend is causing states to lose hundreds of millions per year in tax revenue. For example, wealthy resident of high-tax states can use a Delaware Incomplete Non-Grantor Trust (DING) or the Nevada counterpart (NING) to take advantage of vague or conflicting definitions found in state and federal laws, meaning they can move assets just far enough out of their control to ensure they aren’t liable for state income taxes while keeping the assets close enough not to trigger a 40 percent gift tax.
See Richard Rubin, Wealth N.Y. Residents Escape Tax With Trusts in Nevada, Bloomberg, Dec. 18, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.