Which state is best for your trust situs for your trust? According to independent rankings, the top states with the best trust laws are South Dakota trust law and Nevada in the US. But why is this? Why are there so many states with the best trust laws?
Here’s how they compare and contrast to other trust-friendly states (shhh, don’t tell anyone, but they are all top notch).
Scroll way down to the bottom, after checking out and analyzing the awesome comparison chart of the best trust situs by state, on how to pick the best state for trust laws matching your needs and goals.
| South Dakota | Alaska | Delaware | Nevada | New Hampshire | Tennessee | Wyoming | |
|---|---|---|---|---|---|---|---|
| Can the grantor be a beneficiary? | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Credit rating (S&P) | AAA | AA- | AAA | AA+ | AA | AAA | AA |
| Community property trusts | Yes | Yes | Yes (Residents only) | Yes | No | Yes | No |
| Directed trust laws | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Domestic asset protection trust lookback protections | 2-year / 6-month option | 4-year / 1-year option | 1-year / 1-year option | 2-year / 6-month option | 4-year / 1-year option | 18 months | 4-year / 1-year option |
| Government support | Governor task force & legislature | None publicized | Chancery Court | None publicized | None publicized | None publicized | None publicized |
| Income & capital gains tax (state) | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Public chartered trust companies | 62 | 7 | 45 | 32 | 30 | 15 | 14 |
| Perpetuities / dynasty trust law | Forever | Forever | Personal: Forever Real estate: 110 years |
365 years | Forever | 360 years | 1,000 years |
| Trust-friendly since | 1983 | 1997 | 1910 (approx) | 2005 | 2006 | 2004 | 2003 |
Want to learn more about South Dakota? Click below to get a free copy of our guide.
The Definitive Guide to South Dakota Trust Law.
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AA- |
| Community property trusts | Yes |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
4-year lookback protection for future and pre-existing creditors 1-year option for pre-existing creditors |
| Government support | None publicized |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 7 |
| Pension funding (state level) | 60–69% funded |
| Perpetuities law | Forever |
| Privacy |
Trust documents sealed at judge's discretion Otherwise, documents available to public |
| Private placement insurance premium tax | 8 bps (0.08%) |
| Special purpose entities | Yes |
| Trust-friendly since | 1997 |
| Unemployment (June 2020) | 12.4% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AAA |
| Community property trusts | Yes (Residents only) |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
4-year lookback for future and pre-existing creditors 1-year option for pre-existing creditors |
| Government support | Chancery Court |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 45 |
| Pension funding (state level) | 80–89% funded |
| Perpetuities law |
Personal property can go in perpetuity Real estate can be held for 110 years |
| Privacy |
Records unsealed after three years Judges can order sealing for longer |
| Private placement insurance premium tax | 200 bps (2.00%) up to $100,000 |
| Special purpose entities | Yes |
| Trust-friendly since | 1910 (approximately) |
| Unemployment (June 2020) | 12.5% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AA+ |
| Community property trusts | Yes |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
2-year lookback for future and pre-existing creditors 6-month option for pre-existing creditors |
| Government support | None publicized |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 32 |
| Pension funding (state level) | 70–79% funded |
| Perpetuities law | Trusts must expire after 365 years |
| Privacy |
No total seal Trust documents only sealed at judge's discretion |
| Private placement insurance premium tax | 350 bps (3.50%) |
| Special purpose entities | Yes |
| Trust-friendly since | 1999 |
| Unemployment (June 2020) | 15% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AA |
| Community property trusts | No |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
4-year lookback for future and pre-existing creditors 1-year lookback option for pre-existing creditors |
| Government support | None publicized |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 30 |
| Pension funding (state level) | 60–69% funded |
| Perpetuities law | Forever |
| Privacy |
No total seal Trust documents are only sealed at a judge's discretion |
| Private placement insurance premium tax | 125 bps (1.25%) |
| Special purpose entities | Yes |
| Trust-friendly since | 2006 |
| Unemployment (June 2020) | 11.8% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AAA |
| Community property trusts | Yes |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
2-year lookback for future and pre-existing creditors 6-month option for pre-existing creditors |
| Government support |
Governor task force State legislator participation |
| State income & capital gains tax | 0% |
| Number of chartered trust companies | 62 |
| Pension funding (state level) | 90–100% funded |
| Perpetuities law | Forever |
| Privacy |
Attorneys filing court proceedings can seal trust documents Permanent seal of trust proceedings automatically occurs |
| Private placement insurance premium tax | 8 bps (0.08%) |
| Special purpose entities | Yes |
| Trust-friendly since | 1983 |
| Unemployment (June 2020) | 7.2% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AAA |
| Community property trusts | Yes |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections | 4-year lookback for future and pre-existing creditors |
| Government support | None publicized |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 15 |
| Pension funding (state level) | 90–100% funded |
| Perpetuities law | 360 years |
| Privacy | Attorneys filing court proceedings can seal trust documents |
| Private placement insurance premium tax | Not publicized |
| Special purpose entities | Yes |
| Trust-friendly since | 2004 |
| Unemployment (June 2020) | 9.7% |
| Can the grantor be a beneficiary? | Yes |
| Credit rating (S&P) | AA |
| Community property trusts | No |
| Directed trust laws | Yes |
| Domestic asset protection trust lookback protections |
4-year lookback for future and pre-existing creditors 1-year option for pre-existing creditors |
| Government support | None publicized |
| Income & capital gains tax (state level) | 0% |
| Number of chartered trust companies | 14 |
| Pension funding (state level) | 60–69% funded |
| Perpetuities law | Trusts must expire after 1,000 years |
| Privacy |
No total seal Trust documents only sealed at a judge's discretion |
| Private placement insurance premium tax | 75 bps (0.75%) |
| Special purpose entities | Yes |
| Trust-friendly since | 2003 |
| Unemployment (June 2020) | 7.6% |
You cannot go wrong with any of these states. These states offer the best trust situs for you and your family (sorry CA, TX any NY but your state trust laws are medieval). If an advisor friendly trust company based South Dakota trust laws ranked either #1 or #2 on any given year that is telling you this - that's great impartial advice. There may not be an overall “best trust state law” – but there is certainly a better fit you and your family. Same goes for advisors looking for modern day best trust law states.
Each state has its own details and nuances that could determine whether it’s the best fit for you. States with the best trust situs need to offer more than just being a one trick pony. We’re saying this because we believe South Dakota is an excellent state for almost any trust — it’s why we’re headquartered here — but we also know there’s more to it than a simple chart. We choose South Dakota also for non-trust statute reasons:
Choosing the right state for the best trust situs & laws best must focus on your and your families needs and goals should consider the following:
Choosing the right state for your trust should REALLY be based on the DNA of a corporate trustee. The best states for a client’s trust situs still need to consider how to pick a trustee. Picking a trustee, any type of trustee, is not about:
By that, we mean the reasons behind why the corporate trustee exists, why they got started, and what motivates them. Why does a corporate trustee do what they do, and what do they bring to the table that makes them valuable?
With these answers, you can start searching for states with the best trust situs laws that have the most favorable laws when it comes to complementing your corporate trustee’s practices.
Most importantly, these questions dovetail with the complexities of picking a trustee in the first place, and they’re essential to understanding where your (or your client’s) trust should be held.
Naturally, we’re biased. We’re a trust company giving you information on where you could host your trust. Picking any one of the seven top trust situs states will leave you in good shape. The states with the best trust laws will carry you well towards your goals.
But if South Dakota sounds like it’s a good fit for you and / or your clients, then this is just the tip of the iceberg.
You can learn more about South Dakota trust law and why it’s so important in our complementary whitepaper. Remember, the states with the best trust laws come in all shapes and sizes but the elusive character of the all season corporate trustee does not exist. It comes down to their DNA.
Click the button below to download your free copy about South Dakota trust laws.
Sources:
