For the 9th consecutive year, South Dakota is ranked as the top Dynasty Trust state in the nation while Delaware – long considered a top tier trust jurisdiction – ranks in 7th position, well outside of the top tier. A Dynasty Trust, not available in all states, is a powerful planning tool that essentially allows a trust to live in perpetuity (forever), therefore never subjecting the assets to federal estate taxation through a forced distribution. South Dakota was the first state in the nation to abolish the Rule Against Perpetuities in 1983, clearing the way for the creation of the first Dynasty Trust, ushering in the dawn of modern law.
The rankings chart – an annual ranking of Dynasty Trust states published by Nevada attorney Steve Oshins – is an excellent resource for advisors and clients due to the methodical and objective approach of evaluating the factors that impact the viability of Dynasty Trust states, such as whether they have an asset protection trust statute and state taxation on trusts, a particularly relevant and important topic given the Supreme Court’s recent unanimous decision in the Kaestner case and the Court’s Denial of Cert. in the Fielding case. Click here for a webinar focused on these cases. The holdings in both cases affirm and confirm powerful state tax planning opportunities using trusts in non-income tax states like South Dakota. Steve Oshins’ chart accentuates the vital importance of selecting the proper trust jurisdiction in the wealth and trust planning process to ensure that clients are availing themselves of the most progressive and modern trust laws in the country, accessing powerful tax planning and asset protection.
Other important factors when determining the best Dynasty Trust, not considered in Steve Oshins’ chart, are privacy and state fiscal soundness. Most states have no privacy provisions and in Delaware, after 3 years, sealed trust information can become public. However, South Dakota is the only Dynasty Trust state that has a total, non-discretionary seal on trust information forever, prompting Trusts & Estates Magazine to observe,
“Of the top tier trust jurisdictions, South Dakota has the best trust privacy laws.”
Click here for more information about South Dakota’s powerful privacy provisions.
Given the extreme uncertainty caused by both the pandemic, and upcoming November elections, fiscal soundness of top tier trust jurisdictions has emerged as a vitally important factor with respect to situs selection. Based on several objective factors, South Dakota is considered the most stable and strongest state in the nation, which is explored in detail here.
Additional important factors not considered in Steve Oshins’ chart are the availability of the Special Purpose Entity, as well as the Community Property Trust and Family Advisor, powerful planning tools not available in other U.S. trust jurisdictions that deliver far more direction and control over trust creation and administration to settlors of trusts, beneficiaries, and their advisors than ever before. Learn more about these very progressive and cutting edge trust laws offered by South Dakota, and view an objective chart comparing top tier trust jurisdictions by clicking here, which clearly shows that, in the aggregate, South Dakota is the superior U.S. trust jurisdiction.
For more information regarding Dynasty Trusts, please contact Bridgeford Trust via our contact page.
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Bridgeford Advisors, Inc. is a legally distinct sister company of Bridgeford Trust Company and coordinates consultative, planning, business development, and marketing support at locations in New York, California, Florida, South Dakota, and Pennsylvania.
As an independent, full service trust company with South Dakota Trust powers, Bridgeford Trust Company provides independent, collaborative, and world-class multi-family office and third party fiduciary services to domestic and international families.