In HBO’s Succession, legal threats came from every direction including business rivals, government investigators, and even within the Roy family itself. As we explored in our article, “Protecting Families of Wealth from Themselves: Lessons from HBO’s ‘Succession,'” the series offers a compelling lens into what can go wrong when the complexities of wealth, power, and family dynamics go unaddressed. It underscores the critical need for strategic trust planning that relies on powerful modern trust laws, especially among ultra-high-net-worth families.
Effective asset protection is essential for preserving wealth across generations, protecting family assets from external claims and legal challenges, as well as internal threats like rogue family members and divorcing spouses. Yet despite its clear value, asset protection is often mischaracterized as unethical and nefarious. When carefully designed and executed under the laws of progressive and highly regulated U.S. trust jurisdictions, however, it is a legitimate and vital strategy. For families of significant wealth, it is a critical tool to protect next and subsequent generations from themselves.
Domestic Asset Protection in South Dakota
Domestic Asset Protection Trusts (DAPTs)—available exclusively in a handful of top-tier trust jurisdictions, including South Dakota—are designed to legally shield assets from third-party liability (including spouses in a divorce proceeding) and lawsuits. At the same time, they allow settlors (the individuals establishing the trusts) to retain some control over trust assets and enjoy a discretionary benefit during their lifetime.
A DAPT can be fully discretionary, meaning the settlor may receive financial benefit from the trust (such as income and discretionary principal distributions) while safeguarding trust assets from creditor claims and lawsuits. When paired with South Dakota’s Directed Trust structure, the settlor can also maintain control over investment management. South Dakota has one of the oldest and most progressive self-settled domestic asset protection provisions in the U.S., and with its two-year “look back” fraudulent conveyance statute, South Dakota’s provision is among the shortest in the country.
DAPTs are also increasingly used in lieu of or in conjunction with prenuptial agreements in the pre-marital planning process. While prenups serve a specific purpose, many couples are hesitant to execute them due to personal or legal concerns and as such, many practitioners have turned to alternative ways of protecting assets obtained prior to marriage.
For families with extreme wealth, DAPTs are a powerful planning tool that could have avoided some of the intra-family drama and outside attacks depicted in Succession.
As part of this ongoing discussion, we invite you to watch the recording of our livestream presentation inspired by HBO’s Succession, which examines these planning concepts in greater depth and offers practical insights for families of wealth. View the presentation on our YouTube Channel.
If you have any questions or are looking for further information about South Dakota’s asset protection laws and how they can be used to preserve wealth across generations, please reach out to us via our contact form or call us at (605) 224-9189.
