Why South Dakota?

There is a reason that so many of the Forbes 400 and other wealthy families have chosen to situs their PFTCs and trusts in South Dakota. Many families assume all of the PFTC and dynasty trust states are the same, when there are actually dramatic differences that they should definitely be aware of and research. Many of these points are discussed in this website. South Dakota has been a favorable boutique trust state for the wealthy since 1983. The legislature has proactively emphasized modern trust laws that answer the needs of wealthy families better and longer than any other state. The current PFTC laws combined with the legislative awareness and responsiveness are just a few of the reasons why South Dakota is the most favorable regulated PFTC state in the U.S.. Some of the other compelling reasons are the unique South Dakota trust and tax statutes which are listed below:

Domestic Trust Situs Comparison Summary:

• Pure no state income or capital gains taxes for trusts
• South Dakota has the best unlimited trust duration statute
  • Pre 1986 statute - enacted prior to the Generation Skipping Tax that was enacted in 1986. Based upon 1977 Murphy case that the I.R.S. acquiesced in.
    • Wyoming 1000 year rule and Nevada 365 year rule. Both utilizing term of year approach, which many advisors claim present issues.
    • New Hampshire post-1986 (no experience)
  • Self-settled trust/asset protection legislation
    • Needed to reimburse grantor for income taxes paid for the trust pursuant to R.R. 2004-64 without subjecting the trust to creditors.
    • Also utilized for asset protection and other unique planning
    • Problem in Wyoming and New Hampshire (no self-settled trust statute)
• Lowest state insurance premium tax:

• Reformation and modification statue to modernize an existing trust re administration. Very inexpensive and time efficient process in South Dakota with the courts.
• Best trust privacy statute in the U.S. (only state with total seal forever, Delaware 3 years)
• First Trust Protector statute in the U.S. (1997).
• Great directed and delegated trust provisions allowing trustees to work with outside investment advisors. Please see Trusts & Estates article written by SDTC management entitled : "Delegated vs. Directed Trusts" (pdf) July 2006.
• Please see the "State Comparison Chart" below summarizing the differences between selected states: