Shanda Galloway
Estate/Trust Planning
Writing Assignment 3: DAFT and DING
A DAFT, Delaware Asset Protection Trust, is a trust that can protect one’s assets from
future creditors or it can be used in place of a prenuptial agreement to protect one’s assets.
This trust can last forever unless it holds realty property, which it can only hold for 110
years unless the realty property is owned by an LLC, then it can hold it indefinitely. A
DING, Delaware Incomplete Gift Non-Grantor trusts, which if set up properly can lower
or even eliminate state income taxes on accumulated income and capital gains. Delaware
does not levy state taxes on undistributed income on dependents if they are not a Delaware
resident. When a DING is structured properly can result in lower state income taxes on the
sale of highly profitable asset or in a dynasty trust if capital gains is or may be
accumulated for future distribution. Residents of Alaska, Florida, Nevada, South Dakota,
Texas, Wyoming, and Washington do not have a need for a DING trust since none of those
states impose and a state tax on trusts. Some other states charge a tax on trust distributions
if the person receiving the distribution is a resident of that state. Most of this can be gotten
around if the DING is set up properly. Residents in the state of NY can bypass any state
tax if the trustees and the property being held are from outside the state of NY. Delaware
Trusts can provide estate and generation-skipping tax savings. Currently the Unified Credit
Exemption is $5.45 million per person. Any amount over that will be taxed at 40%. Under
a properly established dynasty trust this tax can be avoided not just for current generations
but for many generations to come.