A marker of wealth is often the reluctance to talk about it. Don’t talk about it, be about it. South Dakota trust benefits allow for exactly that. South Dakota’s lawmakers were wise beyond their years when they passed attractive trust laws. These laws have placed South Dakota’s trust benefits among the top in the country. Flexible with time, the laws have evolved with the needs of estate attorneys and their clients. Other states such as Tennessee, Nevada, New Hampshire, and Delaware also provide trust benefits. But none of them can touch South Dakota.
South Dakota’s trust benefits range from (1) no state income tax, (2) dynastic trusts, (3) asset protection, (4) directed trusts, and (5) some of the leading privacy rules in the nation. These laws run the gamut of financial protection and service and in this South Dakota Trust Laws series, we explore them.
No State Income Tax
There will be no taxes collected on the $234 billion held in South Dakota trusts. None, zero, zilch. There’s no state income tax, no capital gains tax, no dividends, and no interest tax. Furthermore, there’s no state LLC or LLP taxes, no ad valorem tax, no city or local taxes, either. One of the most dreaded taxes for high net worth families is the Generation-Skipping Transfer Tax. Its absence is one of the many benefits of South Dakota trust laws.
Since 1997, South Dakota lawmakers have passed an annual average of three trust related bills “by healthy margins.” These laws have crafted some of the leading dynastic trust laws in the nation—if not the world. South Dakota’s dynastic trust benefits were ranked first in a recent survey of wealth professionals. The state is ranked first for its trust decanting laws and other benefits such as protections of discretionary trusts from a divorcing spouse. South Dakota’s trust benefits outweigh any financial anxiety. Why leave your wealth creating assets in trust for 100 years when you can ensure the most beneficial tax advantages for your money until the world stops spinning? Today there are more millionaires and billionaires than ever before. A wise way to avoid multiple hits of taxation is by using South Dakota’s dynastic trust benefits to grow your wealth for multiple generations. As the number of millionaires increases each year, dynasty trusts for all spectrums of wealth become increasingly more practical.
Considering five factors, South Dakota’s trust benefits in terms of Asset Protection far exceeds the competition. This determination is based on the state’s lack of income tax, the state’s statute of limitations for future creditors, its statute of limitations for preexisting creditors, its spouse and child support creditor exception, and its view of preexisting torts creditors. South Dakota’s two-year general limitations rule exceeds the nation’s standards. Perhaps more importantly, South Dakota’s six-month date of the discovery rule is meant to protect trust assets.
South Dakota directed trusts benefit from passive laws that allow trust advisors to delegate the management of assets held in trust to the expertise of third parties. Sound complicated? Simply put, a South Dakota directed trust allows you to place your stocks, apartment building, fast food franchise, family cattle farm, or even a Rembrandt in a South Dakota Directed Trust with your wealth advisor working in tandem with individual experts tailored to his client’s needs. This is unique because it allows for the perpetual continuation of a family business under the careful guidance of multiple experts.
South Dakota’s trust laws emphasis privacy. South Dakota’s Quiet Trust benefits mean the trustor can restrict and even conceal the existence and information about a trust from a trustee. This may be used as a tool by wealthy grandparents as an incentive to make productive grandkids out of fears socialites won’t amount to much. Additionally, sealing trust records from public view is as easy as petitioning the court. These strong privacy laws help protect family assets from spouses, the prying public, and foreign governments looking to collect taxes.
Recently, Trusts and Estate magazine listed South Dakota’s trust benefits as the first in the nation. The importance of choosing the most appropriate trust location (or situs) depends on a range of issues. A subtle point not often discussed is what level of importance the state legislature places on trust law. South Dakota’s legislature’s annual meeting gives these trust laws extra attention. Additionally, South Dakota trusts benefits also stem from working with a trust task force to keep the law relevant and focused. South Dakota’s trust benefits can be suited to each family’s needs. International families looking for a safe harbor to secure their wealth have often sought South Dakota’s trust benefits. These benefits work for the grantor and beneficiaries for generations to come. With global recognition, South Dakota’s laws are crafted to effectively safeguard large amounts of wealth.
Though South Dakota trust benefits appear simple—don’t be fooled—they are not. South Dakota’s trust benefits are met with thunderous applause from the financial community and informed consumers. South Dakota’s trusts benefit from the lack of residency requirements enacted in the 1990s, which allowed the floodgates to open. The wealthy took notice. Today, the ability to choose the best suits for your family’s wealth means South Dakota’s trust benefits deserve a moment of your time. Changing the situs and/or the governing law of an already existing trust becomes easier with another South Dakota trust benefit—decanting. But I de’cant type anymore.