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When most people think of South Dakota, they think of long stretches of plains and cold weather, but they may be surprised to know that, according to Q2 2023 FDIC State Profiles, South Dakota contains more than twice the banking assets of New York ($3.4 Trillion vs. $1.7 Trillion). This is because South Dakota has strategically enacted laws that entice people and institutions to do business in South Dakota, and trusts are no exception.

South Dakota is the #1 Ranked Trust Jurisdiction by Trusts and Estates Magazine, January 2022. But what makes South Dakota special?

The state’s trust-friendly legal environment, coupled with a range of progressive trust laws, provides an ideal framework for creating and managing trusts. Below are some, but not all, of the reasons why a South Dakota based trust makes sense.

No State Income Tax

South Dakota does not impose a state income tax, which is a significant advantage for trusts with South Dakota situs, allowing the trust to grow free of state income taxation. This is advantageous for wealthy grantors and beneficiaries who face high income taxes in their home states and desire to create a South Dakota trust holding an LLC or assets. South Dakota trusts holding an entity not only have advantageous asset protection statutes, but the trust would not incur state income tax on gains when the entity sold, and the assets are deposited into the trust. Please consult with a tax professional, financial advisor or your legal advisor regarding your specific situation and tax implications.

Perpetual Trusts

South Dakota allows for perpetual (or dynastic) trusts, meaning these trusts can exist for an indefinite period of time. This contrasts with some jurisdictions that limit the duration of trusts. So what does that mean? It means that a grantor can allow his or her legacy to live on forever…literally! The trust is able to avoid probate and avoid exposing the beneficiaries to unwanted taxes while the trust lives on to accomplish the intended goal of the grantor.

Asset Protection

South Dakota has strong asset protection laws, which can help shield trust assets from creditors. This is an attractive feature for individuals concerned with protecting their wealth or who are engaged in litigious industries. A South Dakota Domestic Asset Protection Trust (DAPT) gives a grantor the best of all worlds. 1) They can put assets in a trust and remove them from their own estate. 2) They can name themselves as the beneficiary of the trust (certain rules must be followed). 3) And finally, the assets that are held in trust are protected from the grantor’s creditors.

Directed Trusts

Directed trusts are a very popular option for trust grantors. The grantor may retain control over investment management and the authority to make distributions, while a South Dakota chartered trust company provides the administrative trustee services. This includes generating trust statements, processing payments, and providing the highly coveted South Dakota situs for the trust*. A South Dakota directed trust gives you all the benefits of South Dakota without giving up the control that so many grantors want.

Privacy Protection

There are several reasons why you may not want to make a trust public: owning property or businesses anonymously, not creating an entitled mentality for the trust beneficiaries, etc. South Dakota law offers a high level of privacy for trust matters. In most circumstances, SD does not require the filing of trust documents with the state, which allows the existence and the details of the trust to remain confidential. Grantors can go as far as concealing the existence of a trust from beneficiaries. We call these trusts “quiet trusts”, and they may be a nice addition to your estate plan.

Flexibility in Trust Design

South Dakota has trust laws that allow for a high degree of flexibility in trust design, asset allocation, diversification, distributions, and administration. This flexibility provides the ability to customize trusts according to specific needs and goals. South Dakota has some of the most progressive trust laws in the country, which is why it has become such a haven for the world’s wealthiest families.

Trust-Friendly Court System

South Dakota is known for having a well-established and efficient court system that understands and supports trust law. This can be crucial for the effective administration and enforcement of trusts. Disputes over trusts can be resolved quickly and efficiently.


When it comes to favorable trust environments, South Dakota is unmatched. The state not only offers unique advantages that allow for the preservation and growth of wealth, but also provides flexibility, customization, and control rarely found elsewhere. The Governor’s Task Force is unmatched with progressive annual regulatory modifications to improve the SD trust world.


Alta Trust enhances the already rich South Dakota trust environment by offering grantors and beneficiaries expertise, world-class service, and the reassurance that your legacy is in good hands.


Give us a call at 303.996.3781 or schedule a consultation.


*Please confer with your legal council to determine if your trust is eligible for SD situs with a SD corporate trustee.

**This information is not legal, tax or financial advice. Please contact your professional estate planning team when completing estate planning specific to your situation.