Skip to main content

When most people think of South Dakota they think of long stretches of plains and cold weather, but they would 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.

No State Income Tax

South Dakota does not impose state income tax. This can be a significant advantage as it can result in significant tax savings, especially for wealthy individuals who may face high income taxes in their home states or for business owners who are selling their companies. This means that any assets held in South Dakota trust are not charged any state income tax.

Strong 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 about protecting their wealth or who are engaged in litigious industries. A South Dakota DAPT gives a grantor the best of all worlds. 1) They can put assets in 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. A South Dakota DAPT acts very much like an onshore tax shelter!

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. It 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 its beneficiary. 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.

Perpetual Trusts

South Dakota allows for perpetual (or dynastic) trusts, meaning that trusts can exist for an indefinite period. This is in contrast to 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.

Directed Trusts

Directed trusts are a very popular option for trust grantors. The grantor retains the control over investment management, and the authority to make distributions, while a South Dakota chartered trust company provides the administrative trustee service. 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.

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.

 

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.