Directed Trusts : The Ins and Outs

Directed trusts separates who manages the trust assets and who administers the trust assets.  This rule gives everyone loads of flexibility for anyone using a trust under South Dakota trust laws.  It allows a person to place her property—both investment and business assets—in trust for heirs as income producing property. This process involves directing the control of the management of trust assets to third party such as a financial advisor, family member or family office but not the corporate trustee. A South Dakota Directed Trust is unique because it allows a ‘donor’ (trust geek speak – grantor) to use a decide who will manage, preserve, enhance, and accrue value for all sorts of property placed in a trust.  These assets can include more than stocks, bonds, mutual funds—ranches, mom and pop shops, apartment complexes, valuable artwork, or even jewelry.

South Dakota’s Directed Trust laws allow grantors to split-up the fiduciary responsibilities and duties that normally tag along with financial investments.  A complex situation traditional and unique assets would have a financial advisor managing/overseeing the marketable securities and a hospitality specialist to manage the day-to-day operations of your fast food franchises.  The corporate trustee would only focus on the trust accounting and administration. This also typically results in lower fees because the primary wealth advisor and all parties involved are responsible for fewer burdens.

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South Dakota Trust Law Benefits: 5 Reasons They Make Sense For You

A marker of wealth is often the reluctance to talk about it. Don’t talk about it, be about it. South Dakota trust benefits allow for exactly that. South Dakota’s lawmakers were wise beyond their years when they passed attractive trust laws. These laws have placed South Dakota’s trust benefits among the top in the country.  Flexible with time, the laws have evolved with the needs of estate attorneys and their clients.  Other states such as Tennessee, Nevada, New Hampshire, and Delaware also provide trust benefits.  But none of them can touch South Dakota.


South Dakota’s trust benefits range from (1) no state income tax, (2) dynastic trusts, (3) asset protection, (4) directed trusts, and (5) some of the leading privacy rules in the nation. These laws run the gamut of financial protection and service and in this South Dakota Trust Laws series, we explore them. 

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