South Dakota trust law vs. California trust law

 

When creating a trust, often times, clients don’t fully understand all their options. All state trust law is not created equal. For clients, knowing the difference between their states benefits and another is not usually common. Most attorneys have heard of top jurisdictions like South Dakota for administering trusts. However, they might not know the different advantages it may have over their state. South Dakota trust law vs. California trust law is one of the most common comparisons clients search for. Using an outside trust situs in order to administer trust can offer value for both the grantor and beneficiaries. Below you will see the comparison of South Dakota trust law vs. California trust law.  

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After reading this, you will have necessary knowledge to make the best decision to use South Dakota trust law vs. California trust law for your trust. The following are the top reasons as to why you should consider using South Dakota trust law vs. California trust law:

No state income tax - There’s no state income tax, no capital gains tax, no dividends, and no interest tax.

Dynastic Trusts - 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.

Asset Protection – South Dakota has enacted legislation which prohibits judicial foreclosure and creditor attachment on beneficial interests in trusts, powers of appointment held by beneficiaries, and reserved powers by a beneficiary. Additionally, a power of appointment in a trust is specifically excluded as a property interest. South Dakota was the first state with a discretionary trust statue for asset protection.

Directed Trusts - 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.

Privacy Rules - South Dakota’s Quiet Trust benefits mean the trustor can restrict and even conceal the existence and information about a trust from a trustee.

Trust Protector- South Dakota was the first state to create a trust protector statute. Many trust documents list a trust protector in order to safeguard the decisions.

Decanting - South Dakota has the #1 ranked decanting statute. Decanting is creating a new trust document and moving the assets. Modifying a trust is sometimes necessary, decanting is an important tool for making these necessary changes. Steve Oshins, one of the top attorneys in the nation, has voted South Dakota as the top decanting state for 6 years in a row

Below is a comparison chart for South Dakota vs. California. 

Comparison Chart

South Dakota trust law

California trust law

State Income Tax

No

Yes (13.30%)

Dynastic Trust

Yes (Perpetual)

Yes ( 90 Years)

Asset Protection

Yes

No

Privacy

Yes- Total Privacy Seal Forever

No (Article 3, Section 16061.7.A.)

Directed Trust

Yes

No

Trust Protector

Yes (Created first in SD)

No

Decanting Statute

Yes (Ranked #1)

Yes

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