The Benefits of Incomplete Non-Grantor Trusts

WealthManagement.com
Dec 03, 2018

William D. Lipkind, Martin M. Shenkman, Jonathan G. Blattmachr 

An incomplete non-grantor trust is a powerful planning tool; not just for the super
wealthy, but for many people who are looking to save state and/or federal income
tax.

Most people associate estate planning—and trusts in particular—with estate
planning, which an ING trust can do. For example, an ING trust is invariably formed
in a state that permits self-settled trusts so that ING trust assets should not be
reachable by the settlor’s creditors. Also, an ING arguably isn’t a self-settled trust
because the trustee has no right to distribute trust assets to the settlor. Rather in the
traditional ING trust, the distribution committee has a special power of appointment
to direct distributions to the settlor or others specified in the document. According
to these interpretations, an ING trust might be safer from claimants than a more
typical self-settled domestic asset protection trust. While the traditional ING trust
provides no estate tax benefit, a newer variant, a so-called completed gift ING, may
be used to safeguard the current high estate tax exemption before it declines. So,
INGs can provide both asset protection and estate tax benefits.

But the most valuable application might now be how to use an ING trust to save
income tax. This bears significant importance after the Tax Cuts and Jobs Act
because of the myriad of different changes that the Act made. There are some
potentially great valuable income tax savings that an ING trust can provide and
several techniques you can use to tailor the ING as a beneficial planning tool for your
clients.

Read their commentary here.