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ING Trusts: Part 1

In the context of trusts, CPAs may have heard someone mention WINGs, DINGs or NINGs. This three-part series explains the advantages, requirements and potential drawbacks of these trusts for estate planning purposes.

ING Trusts: Part 2

After defining ING trusts and how they work in Part 1, we now look at planning opportunities and uses ING trusts afford. 

ING Trusts: Part 3

Armed with the knowledge of what ING trusts are and how they work, and the planning opportunities and uses ING trusts afford, we wrap up this three-part series with a look at the issues and considerations of ING trusts.

Ditch the Ladder. Climb the Jungle Gym.

Is it time for the CPA profession to replace the traditional ladder with a jungle gym—a more flexible, dynamic and inclusive vision of career growth that reflects the complexity of modern accounting and the aspirations of today’s workforce?


Ditch the Ladder

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CPAs: Making Sense of What Comes Next campaign

After learning what ING trusts are and how they work in 

 of this series and reviewing the planning opportunities and uses ING trusts afford in 

, we conclude this three-part series with a look at potential issues and considerations to be aware of when establishing ING trusts.

Though certain powers are retained, preserving some level of control to the grantor, the assets are still being transferred to a separate party to maintain and administer. The relinquishment of complete control in exchange for a much lesser level of control should be noted. The grantor is no longer able to treat assets held in the trust as if they were his or her own.

To expand on this reduced level of control, a power-of-appointment committee acting in conjunction with a distribution trustee is a standard configuration for an ING trust and often used. The power-of-appointment committee is typically composed of other members with a beneficial interest in the trust, making them adverse parties. 

The distribution trustee is often an independent third-party trustee, such as a professional trust company. Some combination of these roles is necessary to ensure that incomplete gift and nongrantor status are both maintained. Certain modifications to the trust agreement, such as the removal of the power-of-appointment party or distribution trustee could cause the treatment to change for purposes of gift tax, income tax or both.

In general, distributions should be made with caution. Distributions to a nongrantor beneficiary may result in a completed gift, causing utilization of the grantor’s lifetime exclusion or, if the donor’s lifetime exclusion has been exhausted, gift tax owed. Distributions back to the grantor may trigger state income tax and/or some form of accumulated earnings tax, depending on the grantor’s state of residence. Distributions back to the grantor without the proper checks and balances in place or distributions made that clearly indicate the grantor did not relinquish control may cause the trust to be reclassified as a grantor trust.

The trust’s underlying assets should also be considered when making any distributions of assets. 

Certain assets, such as installment notes, which are common in ING trusts, may have surprising income tax consequences upon distribution or transfer. (For example, under Sec. 1038(g). For more on Sec. 1038 (in a nontrust context), see Homsany, “

Seller Beware: Repossessions in Real Estate Installment Transactions

,” 56 The Tax Adviser 40, January 2025. 

Lastly, the economic substance of the ING trust may be scrutinized. Simply establishing a trust to obtain favorable income tax treatment where there is no actual change in economic position could lead to the whole transaction being challenged. In determining whether a trust lacks economic substance, courts will analyze the facts and circumstances of the trust, including, but not limited to, the following factors: 

To prevent resident taxpayers from avoiding state income taxes by establishing ING trusts in more taxpayer-friendly states, certain states such as New York and, more recently, California have rendered the use of ING trusts largely ineffective for state income tax minimization purposes by passing legislation that treats ING trusts as grantor trusts (N.Y. Tax Law Sec. 612(b)(41), enacted in 2014, includes trust income in the taxable income of a resident individual “who transferred property to an incomplete gift non-grantor trust.”).

California passed S.B. 131 in 2023, which included the addition of Section 17082 to the California Revenue and Taxation Code. The newly enacted law states the following:

For taxable years beginning on or after Jan. 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayer’s gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayer’s taxable income if the trust in its entirety were treated as a grantor trust under Section 17731 (Cal. Rev. & Tax. Code Sec. 17082(a)). 

This means that, for California state income tax purposes, the ING trust will be treated as a grantor trust. The income of the trust will be taxed to its grantor regardless of trust situs or distributions made. 

In the case of California and, likely, other states that pass similar laws, the treatment is on a prospective basis. Previously earned income not distributed and not yet taxed by the grantor’s state of residence remains untaxed. 

If new legislation in the taxpayer’s state of residence has affected the intended use of an ING trust, there are potential solutions or alternate paths forward. Below are a few options for existing ING trusts:

: Legislation such as California’s newly passed law only targets incomplete gift nongrantor trusts. Modifying the trust agreement to remove any retained powers causing incomplete gift treatment may be a viable option if the grantor has sufficient lifetime gift and estate tax exclusion remaining. The increase in the annual exclusion due to inflation adjustments may have created enough exclusion to cover the amount of the contemplated gift. As a reminder, if sufficient exclusion does not exist, this will result in gift taxes owed.

: Though income earned on a prospective basis may be taxable to the grantor for state income tax purposes, this may not be consequential enough to undo previous planning. There may be a considerable amount of previously undistributed, untaxed income that can continue to remain untaxed if no action is taken. As previously mentioned, depending on the state of residence, a distribution of previously untaxed income may result in a large tax bill due to an accumulated earnings tax being triggered.

: Depending on what is at stake, an option, though extreme, may be for the grantor to move to a state that does not have anti-ING laws in place. There may be an opportunity to establish residency for a specified period and then take any distributions as necessary. The rules for breaking residency can prove burdensome in some states, though, so the rules should be carefully reviewed prior to deciding on any relocation (See Doolittle and Klein, “

Changing Domicile From a High-Tax State to a Low-Tax State

,” 55 The Tax Adviser 54, December 2024). 

Distribute trust assets back to the settlor and start over: Assuming the trust agreement allows for this and consent is obtained from the relevant parties, it may make the most sense to distribute all trust assets back to the settlor in complete liquidation of the trust, undoing any previous planning, and seek a new trust structure to accomplish the desired goal. While this may not sound like an ideal solution, it may be worthwhile to avoid an ING trust’s complexities and administration costs if the associated state income tax savings no longer exist.

Depending on the goals and desired outcomes, utilizing a different trust structure may be a possibility. Trusts such as spousal lifetime access trusts, spousal lifetime access nongrantor trusts, inter vivos qualified terminable interest property trusts, and certain beneficiary defective trusts may be viable alternatives to accomplish similar goals, though not without considerations and roadblocks of their own.

With the correct selection of states and proper planning in place, ING trusts can provide great flexibility and value to their grantors and beneficiaries. Even with certain states passing legislation to limit the use of these trusts for state income tax planning purposes, many other uses and benefits still exist.

Reprinted with permission from The Tax Adviser

of this three-part series defined ING trusts and how they work. Here, we look at planning opportunities and uses ING trusts afford. 

The combination of nongrantor income tax status, along with incomplete gift transfer tax status, provides the potential for solutions to existing problems as well as many unique planning opportunities. Some of the key characteristics of ING trusts that allow them to be such useful planning vehicles are:

State income tax planning opportunities may exist, depending on the grantor’s state of residence along with the trust’s state of domicile. Since the trust is treated as a separate taxpayer for income tax purposes, establishing domicile in a state with more taxpayer–friendly state income tax rules may be possible. 

For example, an individual taxpayer in a state with a high income tax rate may wish to shift income–producing assets to a state with a lower income tax rate or, perhaps, no income tax at all. An ING trust may be a vehicle that the taxpayer can use to accomplish this goal. 

To illustrate, a grantor may choose to establish an ING trust in a state such as Nevada that does not have a state income tax, creating a NING trust, and transfer income–producing assets or assets to be sold in the future to this trust. If all is structured properly and the grantor’s state of residence allows for this, the trust, as a separate taxpaying entity in the state of Nevada, would not be subject to state income tax on its nondistributed, nonsourced income such as portfolio income.

Income specifically sourced to a state other than Nevada would still be taxable to that state, and distributions of nonsourced income to the grantor would likely be taxable in the grantor’s state of residence.

Since an ING trust is structured as an incomplete gift, distributions of income and principal may be made back to the settlor without the risk of adverse estate– and gift–related consequences. However, distributions should be made with caution to avoid the risk of the trust being reclassified as a grantor trust under Sec. 674. 

For example, if distributions are to be made back to the settlor, they must be approved by a power-of-appointment committee and/or an independent trustee. Though not a requisite standard, limiting the amount that may be distributed back to the settlor to an ascertainable standard as defined in Sec. 2041(b)(1)(A) may provide an additional safeguard from any potential reclassification to grantor trust status. 

Compared to other types of trusts, an ING trust’s ability to make distributions back to the settlor adds an additional element of flexibility in the event the settlor needs access to funds held within the trust. 

While each state’s laws differ, certain states such as Nevada have favorable asset protection laws that shield the assets held in trust from the grantor’s creditors. Assets placed in a NING trust generally may not be used to satisfy debts or claims against the grantor arising from divorce, lawsuits, or other liabilities (Nev. Rev. Stat. Sec. 166.170). 

Similarly, while strong privacy laws do not necessarily apply only to ING trusts, Nevada, like many of the states that allow ING trusts, has such laws preventing the details of trusts from being made public, meaning the identities of the settlor, trustee and beneficiaries remain private. For certain types of assets where ownership is made public, titling assets in the name of the trust could provide additional privacy (Nev. Rev. Stat. §§166.170 and 164.041). 

An ING trust, if established in the right jurisdiction, can be structured as a dynasty trust: An irrevocable trust that can remain in existence indefinitely or for an extended period of time, allowing wealth to pass down to multiple generations while minimizing estate, gift and generation–skipping taxes. 

Not all states allow dynasty trusts. Many states adhere to some form of the rule against perpetuities and limit a trust’s duration. Examples of duration limits include limiting the term of the trust to a life in being (a person alive) at the time the trust is created plus 21 years, or a flat 90 years.

States that permit ING trusts, however, often allow for longer trust terms. Nevada, for example, allows a trust to last for up to 365 years. When contrasted with the 90-year limit adopted by many other states, this term is significantly longer and, therefore, significantly more tax-efficient and advantageous for dynastic planning. 

It is important to note that dynastic planning itself, much like asset protection and privacy laws, is not unique to ING trusts. Rather, certain states that permit ING trusts, such as Nevada, also provide a framework for dynasty trusts.

Under the Sec. 1202 qualified small business stock (QSBS) exclusion, some or all of the gain on the sale of stock issued by a domestic C corporation may be excluded from gross income if the requirements of Sec. 1202 are met. 

To provide a very high-level overview of the exclusion, certain noncorporate shareholders who sell qualifying stock of a domestic C corp that they have held for more than five years can exclude from gross income the gain from the sale of the stock up to:

As the name suggests, this exclusion applies to sales of stock in small businesses. To be a qualified small business, the issuing corporation must have had gross assets of $50 million or less at all times after Aug. 9, 1993, and before and immediately after the stock issuance [Sec. 1202(d)]. Again, this high–level overview is not intended to be comprehensive. The complete requirements and nuances of QSBS eligibility are beyond the scope of this article. 

A $10 million capital gain exclusion alone would provide great value to most investors but implementing a strategy that incorporates ING trusts may allow for additional QSBS exclusions. Before going into the mechanics and support for this, it should be noted that there is risk involved with this technique, referred to as “stacking,” and its use falls within a gray area of the law (See Lederman and Casteel, “Qualified Small Business Stock: Gray Areas in Estate Planning,” < https://www.thetaxadviser.com/issues/2024/apr/qualified-small-business-stock-gray-areas-in-estate-planning/ > 55 The Tax Adviser 30, April 2024). 

Sec. 1202(h)(2)(A), in conjunction with Sec. 1202(h)(1), provides that a transferee of QSBS, having acquired the stock by gift, will be treated as having acquired such stock in the same manner as the transferor and having held such stock during any continuous period immediately preceding the transfer during which it was held by the transferor.

In other words, if the eligibility requirements were met in the hands of the donor, they will also be met in the hands of the donee. The QSBS exclusion applies for income tax purposes on a per-taxpayer basis. An ING trust, as a nongrantor trust, is a separate taxpayer for income tax purposes. Thus, establishing an ING trust and funding it with QSBS requires no utilization of the grantor’s lifetime gift tax exclusion and may provide for (“stack”) an additional $10 million of QSBS exclusion.

Though it may seem obvious, it should be noted that since the transferred assets are still includible in the grantor’s estate, the underlying assets of the trust generally will receive a step-up in basis to their fair market value at the grantor’s death [Sec. 1014(a)(1)]. This is a significant benefit to the trust’s ultimate beneficiaries, as it could largely reduce future gains on the disposal of inherited assets in their hands.

Other potential benefits of an ING trust include the deferral of gift tax and probate avoidance.

There is an opportunity to establish an ING trust with the intention of eventually completing the gift at a certain point in the future, all the while realizing the benefits described above prior to completing the gift in the future. Perhaps there is proposed legislation on the horizon with uncertain consequences, and the donor wishes to wait until he or she knows its outcome prior to making the gift. Alternatively, suppose the value of the asset being gifted is somewhat volatile in nature—the donor may wish to determine the trend in appreciation in the asset’s value prior to making the gift, or the donor may wish to make the gift once the value of the asset reaches a specified target value.

As with assets held in other types of trusts, probate avoidance is also a benefit of ING trusts. Probate can be costly and may result in unintended outcomes. The avoidance of probate is always a welcomed benefit.

What are some issues and considerations when it comes to ING trusts? 

Check out Part 3 of this three-part series

In the context of trusts, CPAs may have heard someone mention WINGs, DINGs or NINGs. This three-part series aims to explain the advantages, requirements and potential drawbacks of these trusts for estate planning purposes.

An ING trust is an incomplete gift nongrantor trust. (WINGs, DINGs, and NINGs are INGs designating the state under the laws of which they are respectively established: Wyoming, Delaware and Nevada.) When funding the trust, the transfer to the trust is a completed transfer for income tax purposes leading to nongrantor tax treatment, but the transfer is incomplete for gift and estate tax purposes. 

In other words, an ING trust’s income is taxed separately from its grantor, but the assets transferred to the trust are still includible in the grantor’s estate. 

The trust is structured as a complex trust rather than a simple trust, removing the requirement to distribute trust accounting income annually. The trust’s beneficiaries often include the usual persons, such as the grantor’s descendants, but the grantor may also be named as a beneficiary. 

Trust distributions are determined and approved by an independent trustee, a power–of–appointment committee typically composed of adverse parties such as beneficiaries of the trust, or some combination of the two. The grantor may also have limited control over trust distributions, such as the power to veto distributions to other beneficiaries. 

Ensuring that this decision–making framework is in place regarding distributions and that the grantor’s control is limited is key to maintaining nongrantor trust status.

What causes the gift to an ING trust to be incomplete for estate and gift tax purposes?

Treasury regulations state that a gift may be considered incomplete if the grantor “reserves any power over its disposition,” whether for the grantor’s benefit or for the benefit of another [Regs. Sec. 25.2511-2(b)]. 

While not an exhaustive list, commonly retained powers and rights causing incomplete gift treatment and/or estate tax inclusion include:

Though the above–listed powers and rights causing estate tax inclusion are relevant and should be noted, the powers listed below directly cause incomplete gift treatment and are the more commonly retained powers included in ING trust documents.

Pursuant to Regs. Sec. 25.2511–2(e), a donor is considered to possess a power if it is exercisable by the donor in conjunction with any person who does not have a substantial adverse interest in the disposition of the transferred property or the income therefrom. 

Check out Part 2 of this three-part series to learn about planning opportunities and uses ING trusts afford

Legislation in 2016 created CalSavers, California’s retirement savings program, designed “to ensure all Californians have access to a workplace retirement savings account.”  

The following are some key elements that tax practitioners in California might encounter regarding the program—both for their own firms and for small businesses they work with.

Although the deadlines for larger businesses have already passed, employers with one-four employees have until Dec. 31, 2025, to 

. According to CalSavers, “Businesses that do not employ any individuals other than the owners are exempt from the expansion of the mandate.”

 started to send emails in March based upon businesses with active EDD Employer Payroll Tax Accounts. These emails assign a unique access code to login to the CalSavers website to either register or apply for an exemption.

Employers that do not offer their own retirement plan must register in CalSavers. Sponsoring a qualified retirement plan, such as a 401(k) or SIMPLE IRA among other plans, will exempt a business from needing to register. However, CalSavers will still want to know if the employer is exempt, so there is a mechanism to indicate this on the website (Request Access Code) or via email (see above). 

It is also worth noting that religious, tribal and government organizations are exempt from the program.

Although the employer registers their business in CalSavers, the business cannot contribute or match any funds toward the employees’ retirement accounts. The employer simply remits employee contributions to each employees’ account on their behalf. 

Employees are “automatically enrolled” and must opt out if they do not wish to participate. Default contributions are set at 5 percent of gross pay and increase 1 percent on Jan. 1 of each year until that percentage hits 8 percent. Employees can change this default percentage if they wish.

The funds are automatically invested based upon the employees’ date of birth and target retirement age. Most of the underlying funds are State Street Index Funds. 

The employee’s retirement account is treated as a Roth IRA and therefore is subject to annual IRS contribution limitations. For 2025, the contribution will be limited to earned income up to $7,000, or $8,000 for those age 50 or over.  

Staying informed of the CalSavers program is important for California tax practitioners, even if they already have their own 401(k) plan in place. There will be communications from government agencies, payroll processors and clients that necessitate a general knowledge of this area.   

Note that this article does not cover all elements of the program, so it’s advised practitioners review available resources via 

CalSavers: Did You Get the Memo?

Understand some key elements surrounding CalSavers that tax practitioners in California might encounter regarding the program—both for their own firms and for small businesses they work with.

Accounting is no longer just about numbers. It’s about navigating possibilities—and career paths should reflect that.

For decades, the accounting profession has sold the dream of a singular path to success: graduate with your degree, land a job at a firm and work your way up the ladder to partner. Or exit the firm and become a controller and work your way up to CFO.

 For many, that ladder was clear, structured, and (for some) satisfying.

But for too many others—especially younger generations, mid-career changers and those from historically under-represented backgrounds—the ladder can feel limiting, outdated or even out of reach. Or even worse, not reaching the top can feel like failure.

It’s time for the profession to replace the traditional ladder with a jungle gym (thank you, Sheryl Sandberg) —a more flexible, dynamic and inclusive vision of career growth that reflects the complexity of modern accounting and the aspirations of today’s workforce.

Unlike a ladder, a jungle gym offers multiple ways to reach new heights. You can climb up, sideways even backwards—and sometimes take a step down to ultimately leap forward. That’s the kind of career agility that today’s accountants need.

Consider the rise of nontraditional accounting roles:

These are not deviations from the profession. They are evolutions of it. And yet, many firms and organizations still talk about success as if there’s only one direction: up the ladder.

Three major trends are accelerating the shift away from the ladder model:

What the Jungle Gym Looks Like in Practice

Transitioning to a jungle gym model doesn’t mean abandoning structure. It means expanding it.

Instead of a single upward track, offer multiple pathways with interchangeable roles across departments, service lines or specialties. A tax associate might shift into a tech implementation team. An auditor could explore sustainability consulting or training roles. A controller could try being a business analyst with a focus on data analytics and operations.

Normalize lateral transitions and rotations as growth opportunities. These can deepen perspective, prevent burnout and build team resilience. Empower employees to shape their own trajectories. Let them combine technical, leadership and personal growth goals in ways that make sense for their aspirations—and your business needs.

Encourage mentorship models that support exploration and risk-taking, not just grooming for the executive path.

It’s time to redefine what success looks like in accounting. The jungle gym model honors the complexity of modern accounting and the humanity of the people who choose this profession. Whether you're a managing partner, CFO, HR director or young professional trying to find your place, ask yourself:

Let’s Design the Profession We All Want

The future of accounting is inclusive, dynamic and fulfilling. But we can’t get there if we cling to outdated models of what a “successful accountant” looks like. Let’s give people the freedom to swing, climb, pivot and grow. Let’s build teams where the view from the top isn’t the only one that matters.

Let’s ditch the ladder—and build a jungle gym together.