Selling Your Business? This Could Save You Millions

South Dakota is widely recognized for its dynasty trusts, asset protection, and modern trust laws, but it also plays an important role in certain state income tax planning strategies. One of the most sophisticated examples is the Incomplete Gift Non-Grantor Trust, or ING trust, a specialized structure that, in the right circumstances, may help reduce state income tax exposure while preserving the flexibility of an incomplete gift.

An ING trust is designed to balance two competing tax objectives. The transfer to the trust remains an incomplete gift for estate and gift tax purposes, while the trust is treated as a separate taxpayer for income tax purposes. Achieving that balance requires careful drafting, experienced administration, and a trust jurisdiction capable of supporting sophisticated fiduciary structures.

South Dakota’s value extends beyond its lack of a state income tax. Its experienced trust industry, strong privacy protections, flexible trust laws, and mature fiduciary environment provide the framework necessary to administer these highly technical trusts. While ING trusts are appropriate only in select situations and depend heavily on the grantor’s state of residence and the assets involved, they illustrate how trust jurisdiction can influence planning opportunities well beyond traditional estate planning and wealth transfer.