Trust Situs Matters: The South Dakota Special Purpose Entity

The special purpose entity is a powerful planning tool because it places a liability umbrella over the individuals filling the roles of trust protector, investment committee, and/or distribution committee, therefore protecting them from personal claims connected to their actions in this capacity. Essentially, direction comes from a South Dakota entity and not from any one individual. Equally as important, the special purpose entity concept can be used to destroy nexus between in state trust protectors, investment committee members, and/or distribution committee members, therefore maintaining the jurisdictional integrity of a resident trust with situs in a progressive trust jurisdiction like South Dakota.

Special Purpose Entity ChartSouth Dakota is the only state with a special purpose entity statute. The sole purpose of the special purpose entity is to direct an administrative trustee, such as Bridgeford Trust, relative to trust investments, distributions, and trust protector functions within the directed trust framework. Click here for a detailed discussion about the directed trust concept and how it is changing the trust industry.

The special purpose entity is an important planning tool as it supports and encourages the benefits associated with selecting progressive jurisdictions for trust situs, such as South Dakota, in the wealth and trust planning process. Click here to review the Advantages of South Dakota Trust Law.

Knowledge and understanding of the special purpose entity is just another example of how crucial selecting proper trust situs has become when developing wealth and trust plans for clients. Click here to view the South Dakota’s special purpose entity statute in its entirety.

For more information about special purpose entities, please contact Bridgeford Trust via our contact page.