Privacy Trust Laws have always been of paramount concern to wealthy families and is one of the primary reasons why billions of dollars have been and are being moved into South Dakota for trust administration from around the globe. South Dakota is considered to have the best trust privacy and quiet trust statutes in the United States, as noted in a recent article appearing in Trust & Estates Magazine January 2016, wherein the authors, Daniel G. Worthington and Mark Merric, note:
“Of the top tier trust jurisdictions, South Dakota has the best trust privacy laws.”
South Dakota’s privacy statute provides for a total seal forbidding the release of trust information, including names of settlors, beneficiaries, and the contents of a trust, to the public during litigation. Most states do not have privacy statutes specific to trusts and, as such, privacy is not mandated or guaranteed by law as it is in South Dakota.
To the contrary, Courts in those jurisdictions consider requests to seal the record on a case by case basis, after the commencement of litigation. It is not uncommon for such requests to be denied. Similar to that of Alaska and Nevada, Delaware gives the Court discretion over whether to seal trust information. It is very important to note that, even if a Delaware Court grants the seal, the information is only protected for 3 years. This is a major departure from South Dakota’s statute which seals trust information from the public forever without the need to petition for a Court degree. Therefore, South Dakota’s privacy provisions are clearly superior to that of any other state in the nation and are generally regarding by many practitioners, advisors, and academics as being among the best in the world.
Most states require trustees to inform a beneficiary of his or her beneficial interest in a trust at the age of 18. South Dakota is universally considered by advisors and academics to have the most comprehensive and flexible quiet trust statute in the nation, granting the settlor, trust protector, and the investment/distribution advisor the power to expand, restrict, eliminate, or modify the rights of the beneficiaries to discover information about a trust.
Nevada law is silent on the issue of granting the power to these roles, and Delaware and Alaska’s provisions, while similar, place significantly more restriction on the waiver of notice requirement, rendering all three jurisdictions significantly less favorable than South Dakota.
For more information about South Dakota’s privacy provisions and how they can be incorporated into a wealth plan, please contact us via our contact page.