Prior to January 1, 2023, California residents were able to avoid California taxation for any income earned by the ING trust that was not distributed to them. Incomplete Non-Grantor (ING) trusts are incomplete (“gift”) non-grantor trusts with the unique purpose of avoiding the imposition of state income tax on transactions occurring inside the trust.
The ING trusts were allowed to be formed in states that do not tax trust assets, such as Delaware Incomplete-gift Non-grantor Gift (DING), Wyoming Incomplete-gift Non-grantor Gift (WING), Nevada Incomplete-gift Non-grantor Gift (NING) to name a few.
On July 10, 2023, Governor Newsom signed legislation (Senate Bill 131) that codified California state income tax treatment of INGs. Effective, retroactive to January 1, 2023, California will treat INGs as grantor trusts for State income tax purposes.
Senate Bill 131 added section 17082 to the California revenue and Taxation Code that states that California residents who transferred assets into an ING will be treated as the owners of the ING for California income tax purposes and will be liable for any taxable income earned by the ING.
If you would like more information regarding INGs or other estate/trust issues, please feel free to contact our KROST’s estate and trust specialists.
About KROST’s Estate and Gift, Trust, and Probate Services
Our estate planning team assists with the transition of family wealth and estate succession. Our team of experts has over 90 years of combined experience working with family-owned and privately held companies, as well as high-net-worth individuals. Our primary goal is to assist individuals and their attorneys to effectively transfer wealth while minimizing unnecessary estate, gift, and generation-skipping taxes. In addition, we can coordinate all of your Trust, probate, and estate planning needs to ensure a smooth transition while minimizing emotional, tax, and administrative burdens.
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About the Experts
Richard Umanoff, CPA, MBA
Principal
Tax, Estate & Trust, Gift and Probate
Richard Umanoff, CPA, MBA, is a Principal at KROST CPAs. Richard’s career spans over 40 years, with a concentration in taxation. His primary emphasis is estate and trust tax compliance, planning, estate administration, and probate court accounting. Richard currently serves in the role of trustee for numerous clients. » Full Bio
Douglas A. Venturelli, Esq.
Principal
Tax, Estate & Trust, Gift and Probate, Sports & Entertainment
Douglas A. Venturelli, Esq., is a Principal at KROST. He has over 35 years of experience in Tax, Estate, and Business Services. His main focus is consulting with Entertainment, legal, Real Estate, and medical industry clients as well as managing many fiduciary and estate tax issues. » Full Bio
So Sum Lee, CPA
Principal
Tax, Real Estate, Technology, Hospitality
So Sum Lee, CPA is a Tax Principal at KROST. So Sum has over 18 years of experience in public accounting and has a wide range of experience in Taxation, as well as servicing high-net-worth clients. So Sum’s area of expertise includes industries such as wholesale, Real Estate investments, and Restaurants. » Full Bio