For the 5th consecutive year, South Dakota is again ranked as being the top Dynasty Trust state in the nation while Delaware, long considered a top tier trust jurisdiction, slips to the 7th position. A Dynasty Trust, not available in all states, is a powerful planning tool that essentially allows a trust to live in perpetuity (forever), therefore never subjecting the assets to federal estate taxation through a forced distribution. South Dakota was the first state in the nation to abolish the Rule Against Perpetuities in 1983, clearing the way for the creation of the Dynasty Trust.
The rankings chart, an annual ranking of Dynasty Trust states from across the country published by Nevada attorney Steve Oshins, is an excellent resource for advisors and clients because of the methodical and objective approach to evaluating the factors that impact the viability of Dynasty Trust states, such as whether they have an asset protection statute and how effective it is in comparison to other states. In addition, the chart considers state taxation on trusts and whether the state has a decanting statute. The chart accentuates the vital importance of considering alternative trust jurisdictions in the wealth and trust planning process to ensure that clients are availing themselves of the most progressive trust laws in the country, particularly in the area of Dynasty Trust formation, which continues to be a very hot topic.
A very important factor to consider relative to whether a Dynasty Trust state is the best for clients, that is not considered in Steve Oshins’ chart, is privacy. States have different privacy provisions protecting information contained in a trust from becoming public. Pennsylvania has no privacy provision and in Delaware, after 3 years, trust information can become public. South Dakota is the only Dynasty Trust state that has a total seal on trust information forever. Clearly, this is also an important factor to consider when determining where to place a trust in the wealth planning process. Click here for more information about South Dakota’s powerful privacy provisions.
Other important factors not considered in Steve Oshins’ chart are the availability of the Special Purpose Entity, as well as the newly created Community Property Trust and Family Advisor, powerful planning tools not available in other U.S. trust jurisdictions that deliver far more control over trust creation and administration to settlors of trusts, beneficiaries, and their advisors than ever before. Learn more about these very progressive and cutting edge trust laws offered by South Dakota by clicking here.
Steve Oshins’ chart can be viewed by clicking on the image below.
For more information regarding Dynasty Trusts, please contact Bridgeford Trust via our contact page.