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NINGs, WINGs, and DINGs?

Law Firm of Jeffrey Burr

Estate planners in particular seem to love acronyms.  So what is a NING (aka WING or DING)? A NING is a Nevada Incomplete-gift Non-Grantor Trust.  It is an irrevocable trust where the trust is its own taxpayer (in contrast to most trusts that are formed as “grantor” trusts).  The Trust is taxed in the state where the trust is established instead of the state where the Grantor resides.  The transfer of assets to the NING is an incomplete gift for gift and estate purposes, therefore the assets going to the trust do not utilize the grantor’s lifetime gift exclusion and the assets could be used by (or distributed to) the grantor later.

Who would be interested in this type of trust? 

NINGs are beneficial for those living in states with high income tax.  Here’s an example:

Yoda lives in a state that imposes a 10% state income tax on income and capital gains.  Many years ago Yoda invented the light saber, a high-tech battle weapon preferred by Jedi knights.  Yoda is thinking of selling his patent rights to STARK, Inc., a weapons manufacturer.  Yoda thinks that the patent rights might be worth $10 million, and Yoda’s development costs for the light saber were minimal so Yoda’s estimated capital gain if he were to sell the patent would be $9.8 million.

Yoda could transfer the patent, an intangible asset, to a NING.  The NINGwould be established in Nevada and would be managed by a Corporate Trustee in Nevada.  Upon the Trustee’s sale of the patent to STARK, Inc., the gain on the sale for tax purposes would be recognized entirely by the Nevada Trust.  Federal income taxes on the capital gain would be reported and paid by the Trust on a Form 1041.  Using this structure Yoda has effectively avoided the additional state income tax on the capital gains because the trust is taxed as a Nevada entity and Nevada does not impose income tax on individuals or trusts.  Yoda may be the beneficiary of this trust and can receive distributions from the trust.

The popularity of these trusts soared in the early 2000’s after states like Delaware, Alaska, and Nevada passed self-settled spendthrift trust statutes.  Thereafter in 2001, the IRS issued numerous Private Letter Rulings beginning that set the ground work for the income tax and estate tax issues concerning these trusts.  The attractiveness of these trusts continued through 2007 until the IRS indicated that they were taking a new approach to the DING/WING/NING.

However, in 2013, the IRS issued a new Private Letter Ruling (PLR 201310002) that renewed the favor of the NING.  This PLR, based upon Nevada’s self-settled spendthrift trust statute (NRS 166), renewed interest in this type of planning.  There are many more details to this type of trust that are provided in the PLR and details of the Grantor’s state income tax laws and the Grantor’s specific situation must be carefully analyzed by counsel before moving forward.


To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing, or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Attorney Jason C. Walker

Henderson Office
2600 Paseo Verde Parkway, Suite 200
Henderson, NV 89074
Phone: 702.433.4455
Fax: 702.451.1853
Las Vegas Office
10000 W. Charleston Blvd., Suite 100
Las Vegas, NV 89135
Phone: 702.254.4455
Fax: 702.254.3330
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