global Tax DING Trusts: A Smart Strategy for State Income Tax Savings September 04, 2025 With high-income earners continuing to seek strategies for minimizing state income taxes in 2025, Delaware Incomplete Non-Grantor (DING) Trusts are gaining traction. As states like Massachusetts, California, and New York maintain high income tax rates, more individuals are turning to DING trusts as a tax-smart estate planning tool. If you live in a high-tax state and have significant investment income, a DING trust may help you reduce your tax burden without relinquishing control of your assets. By taking advantage of favorable state laws, you may be able to grow your wealth more efficiently and protect it for the next generation.We’ll explain what a DING trust is, how it works, who benefits most, the pros and cons, and alternatives for non-Delaware residents. What Is a DING Trust?A Delaware Incomplete Non-Grantor (DING) Trust is an irrevocable trust used primarily to reduce or eliminate state income tax on investment income while preserving a level of control over the assets."Incomplete gift" status means the transfer to the trust isn’t treated as a completed gift for federal gift tax purposes."Non-grantor" status means the trust itself, not the grantor, pays the income tax—and if properly structured, it avoids state income taxes in the grantor's home state.These trusts are a strategic solution for individuals in states with high income tax rates.How Does a DING Trust Work?Key Structural Features:Incomplete Gift: The grantor retains certain rights, so the gift isn't complete from a federal gift tax standpoint.Non-Grantor Trust: The trust is treated as a separate taxpaying entity, removing state tax obligations tied to the grantor's residency.Is a DING Trust Only Available in Delaware?No. While Delaware is the most well-known jurisdiction for DING trusts due to its favorable trust laws and lack of state income tax on certain trust income, other states offer similar ING (Incomplete Non-Grantor) trust structures.States like Nevada and Wyoming also have trust-friendly laws and can serve as alternatives, depending on your individual situation.What Are the Benefits of a DING Trust?State Income Tax Savings: Potential elimination of state tax on investment income.Asset Protection: Certain structures shield assets from creditors.Control: Grantors can retain control over distributions through a directed trust.Estate Planning Efficiency: Allows wealth to grow outside the taxable estate in a more tax-advantaged environment.Who Should Consider a DING Trust?DING trusts may be right for:Residents of high-tax states (e.g., California, New York, Massachusetts)High-net-worth individuals with significant investment income or capital gainsFamilies seeking multi-generational wealth strategiesIndividuals looking for tax strategies without giving up asset controlWhat Are the Drawbacks?State Challenges: Some states may still attempt to tax trust income based on the grantor's residency.Legal Complexity: Requires a skilled estate planning attorney familiar with federal and state tax nuances.Administrative Costs: Ongoing fees for trust setup, legal compliance, and maintenance.FAQs1. Can I set up a DING trust even if I don’t live in Delaware?Yes, but you must use a trustee and trust situs in a state like Delaware, Nevada, or another with favorable tax laws.2. Do DING trusts protect assets from lawsuits or creditors?In some cases, yes—but asset protection laws vary by state.3. Is this the same as an ING trust?Yes. DING is Delaware's version of an ING (Incomplete Non-Grantor) trust. Other states offer similar structures under different names.4. How long does it take to set up a DING trust?Typically 4–8 weeks, depending on the complexity and availability of your estate planning professionals.Our estate planning experts can help you analyze your financial picture and determine if a DING trust fits into your overall strategy.
