Why South Dakota?

SDTC's choice for a trust company location is South Dakota because of the state's advantageous trust and tax laws, its cost efficient and dedicated workforce, the founders' previous favorable experience and their market recognition with the state. South Dakota was one of the first states (1983) to allow a trust to endure perpetually, essentially jumping outside the onerous federal transfer (gift, estate and generation-skipping) tax system theoretically forever. Currently, twenty-four other states have joined the ranks of offering a long-term trust. Nineteen of these states, including South Dakota, allow for a trust to go on in perpetuity.

South Dakota can be distinguished from these other states by its modern trust laws coupled with the fact that it does not impose any form of state taxation on the assets that comprise a trust located there. This includes, but is not limited to: no state income, capital gains, dividend/interest and/or intangible's taxes. Additionally, South Dakota has the lowest insurance premium tax of any state (i.e. 8 basis points or 8/100ths of 1%) and also offers other very favorable insurance legislation. South Dakota also has both excellent self-settled trust as well as Third Party Discretionary trust statutes, both allowing for domestic asset protection planning with trusts.

South Dakota is the first state and only state in the U.S. with a Third Party Discretionary Trust statute for asset protection, which states that a discretionary interest in third party trust, limited power of appointments, and remainder interests are not considered property interests. This statute is extremely important to properly asset protect trusts set up to benefit one's family. Please see: “Where Should You Situs Your Trust? South Dakota’s New 3rd Party Discretionary Support” (pdf) By Mark Merric, Francis Becker, & Pierce McDowell; Steve Leimberg's Asset Protection Planning Newsletter Issue 104; May 10, 2007. South Dakota also has some of the top rated Asset Protection statutes for LLCs and LPs based upon a powerful "sole remedy charging order statute". Please see "Forum Shopping for Favorable FLP and LLC Legislation, Part 1 (pdf), Part 2 (pdf) and Part 3 (pdf)."

Consequently, most of the unique and creative trust strategies for the wealthy involve trust administration in South Dakota without the necessity of having the trust's family reside there. One of SDTC's founders, Pierce McDowell, has taken a very prominent role on the state's trust legislative committee for more than sixteen years so that SDTC and the state of South Dakota may best serve the wealthy and their advisors.