South Dakota is again ranked – for the 8th consecutive year – as having the top decanting statute in the nation! Published by Nevada attorney Steve Oshins, the new 8th Annual Trust Decanting State Rankings Chart is an excellent resource for advisors and clients because of his methodical and objective approach to evaluating the factors that impact the viability of a state’s decanting statute.
The concept of decanting has become a very powerful tool for planners to modify irrevocable trusts and has emerged as one of the most progressive planning strategies available in dealing with dynasty planning issues. Appropriately referred to as a “do over,” decanting essentially distributes assets from an irrevocable trust into a new trust with different, and presumably more desirable and flexible terms, leaving the unwanted terms in the original trust and not binding on the assets. Decanting is also a streamlined option for easily transferring a trust from one state jurisdiction to another more favorable jurisdiction, such as South Dakota, with directed and asset protection trust statutes.
Steve Oshins’ findings regarding South Dakota’s decanting 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, as being the best Dynasty Trust state.
- Unequivocally has the most robust privacy laws in the country, as pointed out by an article appearing in the January 2020 edition of Trusts & Estates magazine comparing U.S. trust jurisdictions wherein the authors 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 taxes in the nation at 8 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. Be sure to review our well-researched chart comparing the leading U.S. trust jurisdictions, with a particular emphasis on areas that clearly distinguish South Dakota as the best trust jurisdiction in the overall analysis.
For a more detailed discussion about decanting and how it modifies irrevocable trusts that were once considered unchangeable, watch a video on the decanting concept and how it works in the planning process.