As we continue to brace for potentially significant changes in the tax arena, South Dakota’s Community Property Special Spousal Trust remains a very powerful state income and estate tax planning tool. This very progressive tax concept, only available in three states, allows married settlors of the trust to avoid state taxation on undistributed retained income within the trust since South Dakota does not have an income tax. In addition, and equally compelling, trust assets are treated as community property at the death of the first spouse, applying a 100% step-up in basis at date of death, therefore, avoiding federal capital gains taxation of marital/trust assets in a subsequent sale.

Watch the video below for more information about Community Property Trusts.

To learn more about how Community Property Trusts create a powerful tax move, click here. As always, please contact Bridgeford Trust via our contact page with any further questions or to find out how we may be able to assist with this and other planning opportunities under South Dakota trust law.