Domestic Asset Protection Trusts, available only in a small number of states (17), are a formidable planning strategy that legally shields assets from third party liability (including spouses in a divorce proceeding) and lawsuits while permitting settlors (the person establishing the trust) to retain some control over the trust assets and enjoy a discretionary benefit during their lifetime. South Dakota has one of the oldest and most progressive self-settled domestic asset protection provisions in the United States. With its two year “look back” fraudulent conveyance statute, South Dakota’s is among the shortest in the country (Delaware has a four year fraudulent conveyance statute).
In a December 2018 issue of Trusts & Estates Magazine, authors Mark Merric, Daniel G. Worthington, Paul MacArthur, and John E. Sullivan closely and objectively examined domestic asset protection trust statutes in the context of various factors including a state’s discretionary support statute and alter-ego statute. South Dakota is the only state appearing in the first tier in both areas. Based upon a thorough analysis of these, and other factors, the authors concluded that South Dakota is a top tier domestic asset protection trust jurisdiction, while Delaware, Wyoming, and Alaska are considered second tier jurisdictions. This well supported and objective conclusion again accentuates the vital importance of selecting the proper trust jurisdiction in the planning process. Click here for the full article: “Best Situs for DAPTs in 2019.”
Trusts & Estates Magazine’s findings regarding South Dakota’s domestic asset protection trust statute are 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.
- Unequivocally has the most robust privacy laws in the country, as pointed out by an article appearing in the January 2018 edition of Trusts & Estates Magazine comparing U.S. trust jurisdictions wherein the author noted, “Of the top tier trust jurisdictions, South Dakota has the best trust privacy laws.”
- 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.”
- Has one of the lowest insurance premium tax in the nation at 8 basis points.
When all of these attributes are considered in the aggregate, South Dakota clearly emerges as the superior trust jurisdiction in the nation. Click here for a 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.
For more information on domestic asset protection and other modern trust laws, please contact Bridgeford Trust via our contact page.