Trusts & Estates magazine has once again named South Dakota as a top-tier trust jurisdiction, with Wyoming, New Hampshire, Tennessee, and Ohio ranked as 2nd tier. Every two years, Trusts & Estates magazine evaluates trust jurisdictions utilizing an objective approach that considers the following factors: 1) whether a state has a Rule Against Perpetuities; 2) whether a state has income, inheritance, or premium taxes; 3) whether the state has adopted “modern trust laws” such as decanting provisions, directed trust capability, and privacy options; 4) whether a state has an asset protection statute and the effectiveness of the statute; and 5) the effect of migration on the rights of beneficial interest.
South Dakota has been consistently considered by many commentators and planners to be the best trust jurisdiction in the nation because of its cutting-edge laws around asset protection, dynasty trusts and directed trusts, and privacy. Trusts & Estates magazine’s article again accentuates the vital importance of selecting the proper trust jurisdiction, stating:
“There continues to be marked differences between the laws of those jurisdictions that we consider ‘the best’ for trusts and those that we deem less competitive. Planning professionals who cater to UHNW clients need to understand the different trust laws and planning opportunities and how they affect those clients and their beneficiaries. This is especially true when the landscape for planning strategies for their UHNW clients is under tremendous pressure to change.”
You can view the complete article entitled “Which Trust Situs is Best in 2022?” by clicking here. This article was written by Daniel G. Worthington and Mark Merric and featured on WealthManagement.com which is the digital resource of Trusts & Estates magazine.
South Dakota Advantage
The authors’ conclusion in this article is particularly compelling when considered in conjunction with the fact that South Dakota:
- Is generally regarded by most practitioners and academics, including Steve Oshins (a Nevada attorney), as being the best dynasty trust state, and having the best decanting statute in the nation. In addition, the authors of the aforementioned article concur with Mr. Oshins, stating, “South Dakota has the most flexible decanting statute…and appears to provide the best example of flexibility for trust remodeling.”
- Unequivocally has the most robust privacy trust laws in the country, as pointed out in the Trusts & Estates magazine article wherein the authors noted, “Of the top-tier jurisdictions, South Dakota has the best trust privacy laws.” (Also, take note of footnote #35 in the article, where a post written by Bridgeford Trust Company was cited and quoted.)
- Is one of only two states with a Community Property Trust, a compelling tax planning tool for spouses.
- Is the only state in the country with the Family Advisor, referred to as a “Trust Protector Light;” not mentioned in the article but a very important planning tool.
- Has one of the lowest insurance premium taxes in the nation at 8 basis points, which applies to both policies held by individuals and policies held within an LLC. (While Delaware boasts 0 basis points on policies held by individuals, policies held within an LLC – which is typically the case – are taxed at 200 basis points.)
- Is the most fiscally sound among all top-tier trust jurisdictions.
When all of these attributes are considered in the aggregate, South Dakota clearly emerges as the superior trust jurisdiction in the nation. View this well-researched chart comparing the leading U.S. trust jurisdictions, with a particular emphasis on areas that clearly distinguish South Dakota as the superior trust jurisdiction in the overall analysis.