Using DINGs to Help Reduce Federal Income TaxUsing DINGs to Help Reduce Federal Income Tax

Numerous articles have been written about using a Delaware incomplete gift non-grantor trust (DING) to help reduce the impact of state income tax.¹ What hasn’t been properly explored, however, is how a DING can reduce federal income tax. Exploring this aspect of DINGs also serves as a reminder that it’s important to take a holistic approach and not become overly concerned with a single aspect of a family’s tax position when making strategic wealth planning decisions across multiple generations.

What’s a DING?

A DING is an irrevocable trust that’s drafted to avoid grantor trust status and to which contributions aren’t considered completed gifts for gift tax purposes. Because it’s a non-grantor trust, the DING is taxed as a complex trust un...