Market Beat: The difference between a DING and a NING
December 26, 2013
Our neighboring state of Nevada frequently ranks near the bottom in many categories. In 2012, Parenting Magazine published a list of the top 10 worst cities in the nation for education, and Las Vegas came out number one.
According to the Annie E. Casey foundation, Nevada ranked 50th in the nation in education for 2012, but did show improvement in several key areas.
There are some areas where Nevada ranks near the top. According to the Beer Institute, Nevada is ranked 6th out of the 50 states for per capita beer consumption.
One a more serious note, there are other areas where Nevada is ranked strongly, and economic freedom is one of them, according to the Mercatus Center at George Mason University.
One place that Nevada is ranked number one is in domestic asset protection. Nevada's trust laws are considered to be the best in the nation overall for asset protection and you don't have to be a Nevada resident to take advantage of them.
In order to rank the states, various categories were considered including state income tax, statute of limitations, reputation, fraudulent transfer standard and others.
California recently raised state income taxes up to 13.3 percent and the new rates are for income as well as capital gains. Californians aren't the only ones seeing higher state tax rates — there are several other locales expected to raise rates soon including New York City.
Is there anything that investors can do to minimize these taxes and keep more of their gains? The answer is yes, and that's where DINGs and NINGs can come into play.
A DING is an acronym for a Delaware Incomplete Gift Non-Grantor trust. So, guess what a NING is — it's a Nevada Incomplete Gift Non-Grantor trust. The only difference between a DING and a NING is the state that the trust is domiciled in.
At one time, Delaware dominated in this market, but a recent IRS ruling has opened the door for Nevada to establish these trusts as well.
For larger portfolios, the savings can be substantial. Investors with significant unrealized capital gains may want to consider the use of a NING trust. Consult with your tax adviser and attorney to see if a trust may make sense for your situation.
With California's top rate over 13 percent, the potential is there to lower your tax bill and keep more of your hard-earned dollars.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information on his money management service can be found at his blog at http://www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.
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