Plan For Your Estate In South Dakota, The Best State For Trust Situs

Wherever you are in the world, you deserve wealth planning solutions that protect your assets and leave your family with a leg up, not a major tax burden weighing them down. Trust situs is one of the most influential decisions you can make during the estate planning process because trust administration depends on trust laws by state. Widely known as one of the best states for trusts, South Dakota is a leading choice for tax-friendly trust situs in the United States, with favorable solutions like dynasty and asset protection trusts. With roots in South Dakota, Security National Bank Wealth Management offers streamlined trust management and planning for individuals and families across the country who are looking to leave their mark.

Understanding Trust Laws By State: Why It Matters For Your Family

Trust laws by state vary widely and have a multitude of different impacts for your family, setting the tone for factors like privacy, security, taxation, flexibility, duration and more. Before you establish trust situs in the state you call home, consider whether another state could be more advantageous for you and your beneficiaries.

Can You Create A Trust In Another State?

Not only do you have the ability to set up the situs of a trust in the state of your choice, doing so is a common estate planning practice families have taken advantage of for years. If you're worried about setting up a trust in another state, know we see it here at Security National Bank time and time again as out-of-state residents seek out the expertise of our South Dakota trust team. We encourage you to do your own research about the best states for trusts, prioritizing a tax-friendly trust situs you feel confident in for securing your family's future.

What Determines The Situs Of A Trust?

Several factors determine trust situs depending on trust laws by state, but generally situs is seen as where the trust is administered and managed by the trustee. The person establishing the trust won't necessarily need to take their own location into the equation. As long as the trust clearly lays out the individual or organization responsible for ongoing management along with the governing state, your trust doesn’t need to be tied to your home turf. Trust situs means your trust will be regulated and governed by the state in which it’s physically maintained. Think of it as the jurisdiction for your trust.

Can You Change The Situs Of A Trust?

If you already maintain a trust but feel like you're missing out on tax advantages and benefits available in another state, you may be able to change your trust situs depending on what type of trust you have. Revocable trusts typically offer flexibility to make changes to your trust during your lifetime, including the situs of your trust. Irrevocable trusts are a bit trickier to alter, but there may be existing language written into the trust that permits you to change situs. If you find you're able to update your trust and/or re-establish situs, South Dakota should be top of mind as the best state for trusts.

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What Is The Advantage Of A South Dakota Trust?

No state income tax. No inheritance tax. No tax on capital gains.

South Dakota trusts are beneficial for what they don't include as much as what they do include. Namely: taxes. South Dakota does not tax on trust assets, whether it's income, interest or capital gains. For your family and beneficiaries, a trust situs in South Dakota could be the difference between a healthy inheritance and a hard pill to swallow in the form of taxes. South Dakota is one of the only states in the country with these lax tax laws.

Plus, it's one of the only states that allows for dynasty trusts, meaning the trust can continue in perpetuity, reaping benefits from generation to generation without imposing wealth transfer taxes. Combined with favorable asset protection trust laws, South Dakota trusts can grow perpetually while protected from threats like creditors or lawsuits so your hard-earned assets don’t get tied up in trouble.

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Take Advantage Of Dynasty & Asset Protection Trusts

When you want to ensure your financial legacy lasts for your grandchildren's grandchildren, a dynasty trust is a long-term wealth management solution that's designed to maximize your estate while minimizing the tax footprint for you and your beneficiaries. A dynasty trust is a trust created to pass your wealth through the generations without incurring transfer taxes such as estate and gift taxes. South Dakota has created a favorable environment for dynasty trusts, allowing the estate to maintain its assets and disperse to multiple generations without substantial losses to cumulative estate taxes.

Similarly, South Dakota is uniquely positioned to secure your assets with asset protection trusts. Unforeseen litigation can devastate a person's financial plan. In addition to creditor protection benefits, domestic asset protection trusts offer estate planning benefits, income and estate tax benefits, and they shield against third-party liability, like a divorce. Security National Bank Wealth Management's advisors have extensive experience in helping families execute plans that achieve their goals through South Dakota trust situs, now and for generations in the future. And if for some reason your trust isn't meeting your goals or the anticipated needs of your family, South Dakota is one of the most flexible states to make changes to both revocable and irrevocable trusts.

The Significance Of Trust Decanting Flexibility

Like decanting wine into smaller vessels, trust decanting is when a trust distributes its funds to other trusts with updated terms better suited to each individual's needs. Decanting is most commonly used for trusts subdivided for individual beneficiaries, allowing the trust investments for each beneficiary to maintain a level of privacy and responsiveness to tax situations. Few jurisdictions allow this flexibility through trust decanting, making South Dakota the best state for trust flexibility and management. Our team at Security National Bank Wealth Management has experience decanting complex trust circumstances to best serve the needs of all parties involved in passing down your wealth and legacy.

Leverage South Dakota's Trust Situs Advantages In Your Legacy Planning With Our Trusted Advisors At Security National Bank

Now that you know where to place your trust, it's time to find the team to initiate and manage your accounts. While South Dakota is our home base, Security National Bank Wealth Management works with families across the country as a preferred partner for South Dakota trust situs. We're eager to answer your questions and alleviate any concerns you may have about establishing an out-of-state trust, including walking you through trust laws by state. Once you're familiar with benefits like tax-free trust income, dynasty trusts, asset protection and trust decanting, we're confident you'll choose our team in South Dakota to give your trust a home. Contact us to learn more about trust situs or to explore all of the personal wealth management solutions we provide for your future.

Place your trust in South Dakota. We'll handle the rest.