Comparison: The Best Trust Laws by State

7 States with the Best Trust Laws

Which state is best for your trust laws for your trust? According to independent rankings, the top states with the best trust laws are South Dakota and Nevada in the US. But why is this? Why are there so many states with the best trust laws?

Here’s how they compare and contrast to other trust-friendly states (shhh, don’t tell anyone, but they are all top notch).

Scroll way down to the bottom, after checking out and analyzing the awesome comparison chart of the best trust laws by state, on how to pick the best state for trust laws matching your needs and goals.

Comparing the 7 Best States for Trusts

 

 

South Dakota

Alaska

Delaware

Nevada

New Hampshire

Tennessee

Wyoming

Can the grantor be a beneficiary?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Credit rating (S&P) 1

AAA

AA-

AAA

AA+

AA

AAA

AA

Community property trusts

Yes

Yes

Yes (Residents only)

Yes

No

No

No

Directed trust laws

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Domestic asset protection trust lookback protections 2

2-year lookback for future and pre-existing creditors

6-month option for pre-existing creditors

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

2-year lookback for future and pre-existing creditors

6-month option for pre-existing creditors

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

4-year lookback for future and pre-existing creditors

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

Government support

Governor trust company task force

State legislature participation for modern day trust laws

None publicized

Chancery Court

None publicized

None publicized

None publicized

None publicized

Income & capital gains tax (state)

0%

0%

0%

0%

0%

0%

0%

Public chartered trust companies (July 2020)

62

7

45

32

30

15

14

State Pension Funding 3

90-100% funded

60-69% funded

80-89% funded

70-79%

60-69% funded

90-100% funded

60-69% funded

Perpetuities "dynasty trust" law 4

Forever

Forever

Personal property can go in perpetuity

Real estate can be held for 110 years

Trust must expire after 365 years

Forever

360 years

Trust must expire after 1,000 years

Privacy trust laws 

Attorneys filing proceedings can seal trust documents

Permanent seal of trust proceedings automatically occurs

Trust documents sealed at judge's discretion

Otherwise, all documents available to public

Records unsealed after three years

Judges can order sealing for longer

No total seal

Trust documents sealed at judge's discretion

No total seal

Trust documents sealed at judge's discretion

Attorneys filing proceedings can seal trust documents

No total seal

Trust documents sealed at judge's discretion

Special purpose entities

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Trust-friendly since

1983

1997

1910 (approx)

2005

2006

2004

2003

Unemployment
(June 2020) 5*

7.2%

12.4%

12.5%

15%

11.8%

9.7%

7.6%

 

Want to learn more about South Dakota? Click below to get a free copy of our guide.

The Definitive Guide to South Dakota Trust Law.

Want to chat about your state? Click Here

Alaska Trust Laws

An oldie, but a goodie. A state with the best trust laws.

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AA-

Community property trusts

Yes

Directed trust laws

Yes

Domestic asset protection trust lookback protections

4-year lookback protection for future and pre-existing creditors

1-year option for pre-existing creditors

Government support

None publicized

Income & capital gains tax (state level)

0%

Number of chartered trust companies

7

Pension funding (state level)

60-69% funded

Perpetuities law

Forever

Privacy

Trust documents sealed at judge's discretion

Otherwise, documents available to public

Private placement insurance premium tax

8 bps (0.08%)

Special purpose entities

Yes

Trust-friendly since

1997

Unemployment (June 2020)

12.4%

 

 

Delaware Trust Laws

Resting on its laurels. A state with the best trust laws. 

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AAA

Community property trusts

Yes (Residents only)

Directed trust laws

Yes

Domestic asset protection trust lookback protections

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

Government support

Chancery Court

Income & capital gains tax (state level)

0%

Number of chartered trust companies

45

Pension funding (state level)

80-89% funded

Perpetuities law

Personal property can go in perpetuity

Real estate can be held for 110 years

Privacy

Records unsealed after three years

Judges can order sealing for longer

Private placement insurance premium tax

200 bps (2.00%) up to $100,000

Special purpose entities

Yes

Trust-friendly since

1910 (approximately)

Unemployment (June 2020)

12.5%

 

Nevada Trust Laws

A worthy adversary. A state with the best trust laws. 

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AA+

Community property trusts

Yes

Directed trust laws

Yes

Domestic asset protection trust lookback protections

2-year lookback for future and pre-existing creditors

6-month option for pre-existing creditors

Government support

None publicized

Income & capital gains tax (state level)

0%

Number of chartered trust companies

32

Pension funding (state level)

70-79% funded

Perpetuities law

Trusts must expire after 365 years

Privacy

No total seal

Trust documents only sealed at judge's discretion

Private placement insurance premium tax

350 bps (3.50%)

Special purpose entities

Yes

Trust-friendly since

1999

Unemployment (June 2020)

15%

 

New Hampshire Trust Laws

Newer kid on the block. A state with the best trust laws. 

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AA

Community property trusts

No

Directed trust laws

Yes

Domestic asset protection trust lookback protections

4-year lookback for future and pre-existing creditors

1-year lookback option for pre-existing creditors

Government support

None publicized

Income & capital gains tax (state level)

0%

Number of chartered trust companies

30

Pension funding (state level)

60-69% funded

Perpetuities law

Forever

Privacy

No total seal

Trust documents are only sealed at a judge's discretion

Private placement insurance premium tax

125 bps (1.25%)

Special purpose entities

Yes

Trust-friendly since

2006

Unemployment (June 2020)

11.8%

 

South Dakota Trust Laws

Hometown favorite. A state with the best trust laws. 

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AAA

Community property trusts

Yes

Directed trust laws

Yes

Domestic asset protection trust lookback protections

2-year lookback for future and pre-existing creditors

6-month option for pre-existing creditors

Government support

Governor task force

State legislator participation

State income & capital gains tax

0%

Number of chartered trust companies

62

Pension funding (state level)

90-100% funded

Perpetuities law

Forever

Privacy

Attorneys filing court proceedings can seal trust documents

Permanent seal of trust proceedings automatically occurs

Private placement insurance premium tax

8 bps (0.08%)

Special purpose entities

Yes

Trust-friendly since

1983

Unemployment (June 2020)

7.2%

 

Tennessee Trust Laws

New kid on the block. A state with the best trust laws. 

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Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AAA

Community property trusts

No

Directed trust laws

Yes

Domestic asset protection trust lookback protections

4-year lookback for future and pre-existing creditors

Government support

None publicized

Income & capital gains tax (state level)

0%

Number of chartered trust companies

15

Pension funding (state level)

90-100% funded

Perpetuities law

360 years

Privacy

Attorneys filing court proceedings can seal trust documents

Private placement insurance premium tax

Not publicized

Special purpose entities

Yes

Trust-friendly since

2004

Unemployment (June 2020)

9.7%

 

Wyoming Trust Laws

Newer kid on the block. A state with the best trust laws. 

Back to top

Can the grantor be a beneficiary?

Yes

Credit rating (S&P)

AA

Community property trusts

No

Directed trust laws

Yes

Domestic asset protection trust lookback protections

4-year lookback for future and pre-existing creditors

1-year option for pre-existing creditors

Government support

None publicized

Income & capital gains tax (state level)

0%

Number of chartered trust companies

14

Pension funding (state level)

60-69% funded

Perpetuities law

Trusts must expire after 1,000 years

Privacy

No total seal

Trust documents only sealed at a judge's discretion

Private placement insurance premium tax

75 bps (0.75%)

Special purpose entities

Yes

Trust-friendly since

2003

Unemployment (June 2020)

7.6%

 

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Which State Has the Best Trust Laws for You and Your Family?

You cannot go wrong with any of these states. These states offer the best trust laws for you and your family (sorry CA, TX any NY but your state trust laws are medieval). If an advisor friendly trust company based South Dakota trust laws ranked either #1 or #2 on any given year that is telling you this - that's great impartial advice. There may not be an overall “best trust state law” – but there is certainly a better fit you and your family. Same goes for advisors looking for modern day best trust law states.

Each state has its own details and nuances that could determine whether it’s the best fit for you. States with the best trust laws need to offer more than just being a one trick pony. We’re saying this because we believe South Dakota is an excellent state for almost any trust — it’s why we’re headquartered here — but we also know there’s more to it than a simple chart. We choose South Dakota also for non-trust statute reasons:

  1. Educated workforce;
  2. Loyal employees (mid-western values);
  3. Non-transient workforce (you don’t live in S.D. for the weather, well except during snowmobiling, hunting, fishing, rafting, hiking, rodeo, state fairs, mountain biking and scenic driving seasons, ); 
  4. Great business friendly state (we just take care of business with no fan fair); and
  5. Very financially prudent (look at our credit rating, unemployment rate, and funded pension liability).

Choosing the right state for the best trust laws best must focus on your and your families needs and goals should consider the following:

  1. Is the geographical proximity to my home of the modern day corporate trustee important? If my advisor is close to my home is that the most important fact?
  2. Do I have a particular issue that I want the state trust laws to address, like privacy, asset protection, or community property?
  3. How important is the financial condition of the state where the modern day corporate trustee and the respective trust laws exist?

Choosing the right state for your trust should REALLY be based on the DNA of a corporate trustee. The best states for a client’s trust still need to consider how to pick a trustee. Picking a trustee, any type of trustee, is not about:

  1. What they do (we all do the same technical functions); but about
  2. Why they do what they do.  

By that, we mean the reasons behind why the corporate trustee exists, why they got started, and what motivates them. Why does a corporate trustee do what they do, and what do they bring to the table that makes them valuable? 

With these answers, you can start searching for states with the best trust laws that have the most favorable laws when it comes to complementing your corporate trustee’s practices. 

Most importantly, these questions dovetail with the complexities of picking a trustee in the first place, and they’re essential to understanding where your (or your client’s) trust should be held. 

Naturally, we’re biased. We’re a trust company giving you information on where you could host your trust. Picking any one of the seven top trust states will leave you in good shape. The states with the best trust laws will carry you well towards your goals.

But if South Dakota sounds like it’s a good fit for you and / or your clients, then this is just the tip of the iceberg. 

You can learn more about South Dakota trust law and why it’s so important in our complementary whitepaper. Remember, the states with the best trust laws come in all shapes and sizes but the elusive character of the all season corporate trustee does not exist. It comes down to their DNA.

Click the button below to download your free copy about South Dakota trust laws.

Get Your Copy of The Definitive Guide to South Dakota Trust Law

Sources: 

  1. https://www.spglobal.com/ratings/en/research/articles/190319-u-s-state-ratings-and-outlooks-current-list-1738758
  2. https://db78e19b-dca5-49f9-90f6-1acaf5eaa6ba.filesusr.com/ugd/b211fb_0e205011bc5f4e4cb9d6232ee68647ca.pdf
  3. https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2020/06/the-state-pension-funding-gap-2018
  4. https://db78e19b-dca5-49f9-90f6-1acaf5eaa6ba.filesusr.com/ugd/b211fb_4e66628a1b8f4808acf03fc4a6b29963.pdf
  5. https://www.bls.gov/web/laus/laumstrk.htm *
    1. Accessed July 2020
    2. Data subject to change as page is updated by Bureau of Labor Statistics