The Scenario: You’re a founder or an early employee. You’ve hit the jackpot—your startup is a unicorn or has just been acquired. Your equity is worth significantly more than $10 million.

The Limitation: You’ve probably already heard of QSBS (Qualified Small Business Stock). You know it’s the “golden ticket” of tax opportunities, allowing you to sell up to $10 million of startup stock tax-free federally and in most states. But what about the rest of your windfall? If you have $30 million in equity, that first $10 million is safe, but the remaining $20 million is staring down the barrel of up to 35% in federal and state capital gains taxes. That’s a multi-million dollar tax bill that can be avoided with QSBS stacking!

What is QSBS Stacking?

QSBS stacking aims to maximize the benefits by transferring QSBS eligible shares to multiple taxpayers, including non-grantor trusts. Each separate taxpayer, person or non-grantor trust, may then be eligible for its own exemption, effectively multiplying the tax savings. If you are wondering when to set up QSBS stacking trusts here is a deep dive on the topic.

The Standard Solution (and its flaw): Usually, wealth advisors will tell you to “stack” exemptions by gifting them to non-grantor trusts for your kids (and spouse). Each trust gets its own $10 million cap. It works, but it comes with a potentially steep price tag:

1. Loss of Access: Those proceeds generally belong to the trust/kids, not you (this often makes sense as your are older or already have had previous exits).
2. Burning your Lifetime Gift Exemption: This transfer counts against your Lifetime Gift Tax Exemption (currently ~$30M for couples in 2026, but it is tied to inflation as well). 

The Opportunity What if you could get extra $10 million QSBS exemptions that you can access without using up your precious lifetime gift allowance? There are two options, the CRUT (Charitable Remainder Unitrust) and another more complicated structure: The ING Trust.

How does an ING Trust work?

The “Simple” Explanation

Practically, setting up an ING Trust is like opening a second, separate bank account that requires a “co-signer” to access. You start by signing legal documents to create the trust and then transferring a portion of your startup shares into it before you sell your company. Once the shares are in there, they live in a separate brokerage account under the trust’s name. When your company exits, the proceeds from those specific shares are wired directly to the trust, not to you personally.

The biggest practical change to your life is how you access that money. You cannot just log in and transfer funds to your checking account whenever you want. Instead, you have to go through a “Distribution Committee”—usually made up of people you choose, like trusted family members or friends. If you want $2 million to buy a home, you make a formal request to this committee. They sign off on it, and then the trust wires the money to you. It adds a layer of administrative friction (a literal “permission slip”), but that friction is the “cost” of getting an additional exemption.

Now let’s go deeper into why an ING trust works from a legal perspective.

How does an ING Trust work? (The Legal Version)

Acronym Breakdown: ING stands for Incomplete Gift Non-Grantor Trust. 

This trust is designed to take advantage of  a specific nuance in the tax code where the rules for Estate Taxes and Income Taxes don’t perfectly align.

1. For Estate Taxes (The “Incomplete” Part)

The IRS views the transfer of shares to this trust as “incomplete.” Why? Because you keep the right to get the assets you transfer to the trust, transferred back to you (more on this below). Since the assets can come back to you, you haven’t technically given the asset away fully (hence it’s an ‘Incomplete Gift’), it does not count against your Lifetime Gift Tax Exemption unless the assets are transferred to someone else from the trust. 

2. For Income Taxes (The “Non-Grantor” Part)

Despite the gift being “incomplete” for estate purposes, the trust is structured so that the IRS views it as a separate taxpayer from you for income tax purposes. Because it is a separate taxpayer, it is eligible for its own $10 million QSBS exemption, in addition to your personal one. Typically you can’t set up a non-grantor trust and be the beneficiary of the trust but you can with an Incomplete Non-Grantor Trust (and Charitable Remainder Trusts).

How does this work?

The Secret Sauce: “Adverse Parties”

For a trust to be a “Non-Grantor” trust (separate taxpayer), you cannot have the power to distribute money to yourself whenever you want. If you did, the IRS would just say the trust is “you” and not a separate tax payer.

To solve this, ING trusts require a Distribution Committee made up of “Adverse Parties.” These are beneficiaries of the trust (like your children, siblings or friends but not your spouse) who also have a right to the trust’s assets. You will typically have at least 3 distribution committee members per ING trust, you and/or your spouse and two other individuals.Everyone of these distribution committee members are also  beneficiaries of the trust. In other words, they can receive distributions from the trust as well. Critically you only need one of the other adverse party beneficiaries to approve a distribution to you while you can retain a veto on distributions to the other two beneficiaries. 

• Why “Adverse”? It’s not that they are your enemies. In tax terms, “adverse” means that if they agree to distribute money back to you, it reduces the pot of money potentially available for them as they are beneficiaries of the trust as well. They have “skin in the game.”
• The Constraint: Because at least one other member has to consent to any distribution, and because distributing to you technically hurts their financial interest, the IRS agrees that you don’t have “unfettered control” over the asset. This tension allows the trust to be treated as a separate entity (i.e. as a non-grantor trust, which receives its own QSBS exemption.

Why the Tech Ecosystem Uses ING’s for QSBS stacking

Founders opt for INGs when they want to maximize the exit proceeds they directly have access to.

1. Preserve Optionality

By using an ING, you unlock an additional QSBS exemption, but the proceeds aren’t locked away in a trust strictly for your heirs forever. Because of the Distribution Committee structure, it is possible (with committee consent) to access those funds. More importantly, you save your Lifetime Gift Exemption for other assets that you might want to pass down to your heirs.

2. Maximizing your Exit

Personal trust stacking is powerful. 

Case study – How does a founder minimize taxes on their $50M exit? 

• Founder (You): Sells $10M of stock with $ $0 Federal Taxes and potentially $0 in State Taxes.
• CRUT #1: Sells $10M of stock with $ $0 Federal Taxes and potentially $0 in State Taxes.
• CRAT #1: Sells $10M of stock with $ $0 Federal Taxes and potentially $0 in State Taxes.
• ING Trust 1: Sells $10M of stock with $ $0 Federal Taxes and potentially $0 in State Taxes.
• ING Trust 2: Sells $10M of stock with $ $0 Federal Taxes  and potentially $0 in State Taxes.

Result: You realize $50 million tax-free and have direct access to those proceeds, saved roughly $10M+ in federal taxes and $5M+ in state taxes, and you still have your full ~$30M gift tax exemption available for additional gifting to your heirs.

How to choose between a CRT and ING for QSBS stacking?

People often choose CRTs and ING’s if they are looking for QSBS stacking where they can still access the proceeds but let’s dive into why they choose one or the other (or in many cases both).

People often choose CRTs if they:

• Have high confidence the timing of the exit due to the limited length of the trust
• Are okay giving ~6-9% of the trust assets to charity in exchange for a 5% charitable deduction
• Want a simpler structure that doesn’t require adverse parties OR want to set up multiple stacking trusts and are running out of trusted adverse parties

People often choose INGs if they:

• Aren’t confident on the timing of the sale of their company
• Are willing to deal with more complexity and adverse parties, in exchange for not having to donate any assets to charity
• Have enough trusted adverse parties they can include in the trust. This is often the biggest limitation for the use of ING trusts. You have to be willing to give others visibility and approval over your financial situation, and trust that won’t create long term risks

Comparison: Standard NGT Stacking vs. ING vs. CRT Stacking

V. The Mechanics: How Does It Actually Work?

Setting up an ING is a precision operation. With Valur the setup and administration cost nothing and can be done the same day. Here is the lifecycle:

• Step 1: Setup: You establish the trust in a jurisdiction with specific trust laws that allow this structure. Nevada (“NING”) and South Dakota (“SING”) are the gold standards here due to their favorable statutes.
• Step 2: The Committee: You appoint your “Distribution Committee.” As discussed, these must be adverse parties (typically at least two others and it’s a good idea to have contingent beneficiaries in case those individuals aren’t available on short notice / get incapacitated) who must approve any distributions back to you or to themselves.
• Step 3: The Transfer: You transfer your QSBS shares to the trust. Critical Timing: This must happen before there is a Sales Agreement to sell your company. If you transfer after the deal is “done” in the eyes of the IRS, the tax benefit fails (known as the “Assignment of Income” doctrine).
• Step 4: The Sale: The company exits. The Trust sells its specific block of shares.
• Step 5: The Filing: The Trust files its own tax return, claiming its own Section 1202 (QSBS) exclusion.

What are the Risks?

At Valur, we believe in transparency. ING Trusts are powerful, but they are not for everyone, and they aren’t without risks.

1. State Tax Issues (The California and New York downside)

New York and California are notoriously aggressive with taxes. Both states have passed legislation that effectively “disregards” ING trusts for state income tax purposes.

• The Nuance: Even if California or NY looks through the trust and taxes you at the state level, the Federal QSBS benefit (Section 1202) still applies because that is a federal statute. You might pay the state tax, but you still wipe out the massive 23.8% federal bill. For a $10M gain, that is still ~$2.38M in savings.

2. 3rd Party Distribution Control

To receive a distribution you need another person/beneficiary, who is an adverse party, to approve a distribution to you and have insight into some of your personal finances. 

• Why this is important: It is really important to choose individuals you really trust and expect to trust over a long time horizon as they will not only know about your personal finances but will have to approve distributions to you (and that they will retain these powers as long as the trust lasts).

3. Timing: ING’s are generally reserved for later stage founders (Series B+ or nearing exit), we call them “Yellow Light” or “Green Light” founders in our QSBS stacking timing guide, with significant potential gains.

VII. Who Should Do This? (The Checklist)

If you can check these four boxes, an ING Trust should be on your radar immediately.

• [ ] You hold QSBS-eligible stock. (Held for 5+ years, or will be by the time of sale).
• [ ] Your projected gain is significantly higher than $10M. (If you have less than $10M, you don’t need stacking).
• [ ] You want personal access to the proceeds versus your heirs.
• [ ] You have upcoming liquidity. (You are pre-LOI but see an exit on the horizon).
• [ ] You have adverse parties who you are comfortable having insight and control over some of your financial assets 

VIII. Conclusion & Next Steps

ING trusts are a key piece QSBS planning for founders focused on personal liquidity. They, along with Charitable Remainder Trusts, allow you to multiply your tax-free exit without compromising your estate planning future or completely locking away your liquidity. While they come with higher complexity than a standard gift trust, the ROI on saving roughly $2.4M in federal taxes per trust is a clear win for anyone who has the opportunity to.

About Valur

We’ve built a platform that makes advanced tax planning – once reserved for ultra-high-net-worth individuals – accessible to everyone. With Valur, you can reduce your taxes by six figures or more, at less than half the cost of traditional providers.

From selecting the right strategy to handling setup, administration, and ongoing optimization, we take care of the hard work so you don’t have to. The results speak for themselves: our customers have generated over $3 billion in additional wealth through our platform.

Want to see what Valur can do for you or your clients? Explore our Learning Center, use our online calculators to estimate your potential savings or schedule a time to chat with us today!