On October 16, 2023, WealthBriefing quoted Kevin Ghassomian on the crackdown on ING trusts in California and how the decision will damage the state.
According to the article, California’s decision to press ahead with the way incomplete gift non-grantor trusts or ING trusts are treated for state income tax purposes means that even more residents will leave California, shrinking the state’s tax base and depressing revenue in the medium term.
“ING trusts with income in 2023 will certainly be impacted, but there’s nothing in the new legislation that incentivizes ING trusts with income accumulated in prior tax years to be shut down,” said Ghassomian.
California has not historically taxed trusts based on the residence of a settlor but has done so based on where the trust’s fiduciaries and beneficiaries reside, he said.
By making the change retroactive, California has prejudiced the ability of its residents to engage in legitimate tax and trust planning.
“California could have followed New York’s approach by enacting a temporary reprieve for residents with existing ING trusts, but it didn’t and as a result there will be continued gamesmanship with INGs and various trust alternatives. Even worse, more and more residents are instead opting to leave the state and, of those leaving, many are business owners, who are taking jobs with them,” Ghassomian said.
Click here to access the article.