Using a NING Trust to Avoid State Income Tax on a Liquidity Event
By Steven J. Oshins, Esq., AEP (Distinguished)
When a client lives in a state with a high state income tax and is about to sell a business for millions of dollars, the tax hit can be enormous. One planning strategy that can be used to save state income tax is the Nevada Incomplete Gift Non-Grantor Trust, commonly known as a NING Trust.
A NING Trust can help a client legally avoid state income tax on the sale of a business or other large capital‑gain event without requiring the client to move out of state.
A NING Trust is established in Nevada, a state with no state income tax and exceptionally strong trust laws. The trust is structured as:
- Non‑Grantor, meaning the trust, not the client, is the taxpayer
- Incomplete‑gift, meaning the transfer to the trust does not trigger gift tax
- Nevada‑situs, meaning Nevada law governs the trust and Nevada has no state income tax
Because the trust is a separate taxpayer, and because Nevada does not tax trust income, the trust can recognize the gain from the business sale free of state income tax.
For example, assume a client is about to sell a business for a $10M gain. If the client lives in a state with a 10% state income tax, depending upon whether there’s a graduated tax, there’s roughly a $1,000,000 state income tax bill.
By shifting the business interest into a properly structured NING Trust before the sale, the gain can be realized at the trust level, potentially eliminating the state tax entirely.
Why Nevada? Nevada offers:
1. No state income tax
2. Top‑tier asset protection statutes
3. Top-tier decanting laws
4. 365-year rule against perpetuities
This combination makes Nevada the premier jurisdiction for ING Trust planning.
Who benefits most? Clients who:
1. Live in high-tax states
2. Are selling a business or large appreciated asset
3. Want to reduce state income tax without relocating
4. Want long‑term asset protection and multigenerational planning flexibility
For the right client, a NING Trust can be a seven-figure tax savings strategy wrapped inside a powerful long‑term estate planning structure. Financial advisors who understand this tool can deliver tremendous value when clients face major liquidity events.
ABOUT THE AUTHOR
Steven J. Oshins, AEP (Distinguished) is a member of the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011. He was named one of the 24 “Elite Estate Planning Attorneys” and the “Top Estate Planning Attorney of 2018” by The Wealth Advisor and one of the Top 100 Attorneys in Worth. He is listed in The Best Lawyers in America® which also named him Las Vegas Trusts and Estates/Tax Law Lawyer of the Year in 2012, 2015, 2016, 2018, 2020, 2022, 2024 and 2026. He can be reached at 702-341-6000, ext. 2 or [email protected]. His law firm’s website is www.oshins.com