Suppose you’ve decided to include one or more trusts in your estate plan. It’s only natural that you should create the trust in the state where you live, right? Wrong. Don’t assume that this is the best approach. For a variety of reasons, you may be better off establishing the trust in a different jurisdiction.

For example, certain trust-friendly states may permit perpetual “dynasty trusts” that benefit many generations to come. Others may allow “silent trusts,” where the beneficiaries don’t have to be notified about their interests. Still others might offer greater flexibility relating to a trustee’s duties and powers than your home state. But the reason most often cited for going out of state is taxes.

In particular, residents of high-income-tax states such as California, New York and New Jersey are flocking to states where there’s no income tax at all. By doing so, you can take advantage of “self-settled trusts” where the grantor and the beneficiary are one and the same. If structured properly, the trust avoids being characterized as a grantor trust in which the income is taxable to the grantor by the state where he or she resides. And you don’t have to move out of state for this tax benefit.

Nevada, Wyoming and Delaware have become known as tax havens for these types of trusts. The applicable trusts are often referred to by the monikers of NINGs (Nevada Incomplete-gift Nongrantor Gift trusts), WINGs (Wyoming Incomplete-gift Nongrantor Gift trusts) and DINGs (Delaware Incomplete-gift Nongrantor Gift trusts), respectively.