Trust Planning for Washington High Earners: ING, NING, and DING Trusts Under ESSB 6346

Key Takeaways

• ING/NING/DING trusts move investment income out of Washington AGI
• Trusts incur federal tax; undistributed income hits top bracket quickly
• Setup costs $25‑75K; ongoing fees $10‑30K annually
• Early creation before Washington regulations strengthens tax shelter viability
• Works for portfolios $10M+; unsuitable for earned‑income‑heavy earners

Pulse Analysis

Washington’s new income tax, slated for 2028, will hit residents whose adjusted gross income tops $1 million, creating a sudden liability for many high‑net‑worth families. Traditional mitigation—relocating to a tax‑friendly state—doesn’t work for those tied to personal or professional commitments. Instead, wealth advisors are turning to incomplete‑gift non‑grantor (ING) trusts, often labeled NING or DING, that are administered in states like Nevada, South Dakota, or Delaware, which do not levy tax on trust income without in‑state beneficiaries. By moving dividend, interest, and capital‑gain streams into these entities, investors can effectively remove that income from Washington’s tax base while retaining indirect benefit through controlled distributions.

The mechanics are precise: the trust must be a true non‑grantor for federal purposes, retain adverse‑party decision‑making rights, and maintain a genuine administrative presence in the chosen situs state. When done correctly, a $30 million portfolio producing $900 k annually can shave roughly $89 k off Washington tax bills each year—a seven‑figure saving over a decade. However, the trade‑off includes compressed federal tax brackets—undistributed trust income hits the top rate after about $15 k—and substantial costs, typically $25‑75 k to set up and $10‑30 k per year for trustee fees and tax filings. Moreover, Washington may later adopt residency rules that treat such trusts as in‑state if the grantor remains a resident, a risk already seen in New York and California.

Strategically, timing is paramount. Trusts created before Washington issues implementing regulations enjoy a stronger presumption of out‑of‑state status, giving families a window to lock in savings. For households with $10 million or more in passive assets, the break‑even point often arrives within the first year, making the structure financially viable. Yet for earners whose income is primarily wages or who can relocate, a simple domicile change remains cheaper and more durable. Advisors should run detailed cash‑flow models, weigh the loss of direct control inherent in adverse‑party governance, and consider complementary tools such as QSBS planning or dynasty trusts. In a landscape where state tax policy is evolving, ING‑type trusts offer a powerful but nuanced lever for Washington’s high earners.