South Dakota Again Considered a Top U.S. Trust Jurisdiction by Trusts & Estates Magazine

Trusts & Estates magazine once again names South Dakota as a top tier trust jurisdiction. Annually, Trusts & Estates magazine evaluates trust jurisdictions utilizing an objective approach that considers the following factors: 1) whether a state has a Rule Against Perpetuities; 2) whether a state has income, inheritance, or premium taxes; 3) whether the state has adopted “modern trust laws” such as decanting provisions, directed trust capability, and privacy options; 4) whether a state has an asset protection statute and the effectiveness of the statute; 5) the effect of migration on the rights of beneficial interest.

Interestingly noting that Delaware, long considered to be a leading U.S. trust jurisdiction, is not keeping pace with other progressive U.S. trust jurisdictions, the authors’ state,

“While Delaware has been in the top four jurisdictions consistently for the past 10 years, we think that its asset protection laws still need to be strengthened for it to remain competitive.”

Alternatively, South Dakota has been consistently considered by many commentators and planners to be the best trust jurisdiction in the nation because of its cutting edge laws around asset protection, dynasty and directed trusts, and privacy. Trusts & Estates magazine’s article again accentuates the vital importance of selecting the proper trust jurisdiction, stating,

“Planning professionals catering to high net worth clients need to understand the difference in trust laws and planning opportunities, and how it affects those clients and their beneficiaries.”

You can view the complete article entitled “Which Trust Situs is Best in 2020?” by clicking here. This article was featured on WealthManagement.com which is the digital resource of Trusts & Estates magazine.

The authors’ conclusion is particularly compelling when considered in conjunction with the fact that South Dakota…

  • Is generally regarded by most practitioners and academics, including Steve Oshins, as being the best Dynasty Trust state, and having the best Decanting Statute in the nation. In addition, the authors of the aforementioned article concur with Mr. Oshins, stating, “South Dakota has the most flexible decanting statute…and appears to provide the best example of flexibility for trust remodeling.”
  • Unequivocally has the most robust privacy laws in the country, as pointed out in the Trusts & Estates magazine article wherein the authors noted, “Of the top tier trust jurisdictions, South Dakota has the best trust privacy laws.” (Also, take note of footnote 49 in the Trusts & Estates Magazine article, where a post written by Bridgeford Trust was cited and quoted.)
  • Is one of only two states with a Community Property Trust, a compelling tax planning tool for spouses.
  • Is the only state in the country with the Family Advisor, referred to as a “Trust Protector Light,” not mentioned in the article but a very important planning tool.
  • Has one of the lowest insurance premium tax in the nation at 8 basis points, which applies to both policies held by individuals and policies held within an LLC. (While Delaware boasts 0 basis points on policies held by individuals, policies held within an LLC – which is typically the case – are taxed at 200 basis points.)
  • Is the most fiscally sound among all top tier trust jurisdictions.

When all of these attributes are considered in the aggregate, South Dakota clearly emerges as the superior trust jurisdiction in the nation. Click here for a well-researched chart comparing the leading U.S. trust jurisdictions, with a particular emphasis on areas that clearly distinguish South Dakota as the superior trust jurisdiction in the overall analysis.

For more information, please contact Bridgeford Trust via our contact page.

South Dakota’s Decanting Statute is Ranked, for the 7th Time, as Best in the Nation

South Dakota is again ranked, for the 7th consecutive year, as having the top decanting statute in the nation! Published by Nevada attorney Steve Oshins, the new 7th Annual Trust Decanting State Rankings Chart is an excellent resource for advisors and clients because of his methodical and objective approach to evaluating the factors that impact the viability of a state’s decanting statute.

The concept of decanting has become a very powerful tool for planners to modify irrevocable trusts, and has emerged as one of the most progressive planning strategies available in dealing with dynasty planning issues. Appropriately referred to as a “do over,” decanting essentially distributes assets from an irrevocable trust into a new trust with different, and presumably more desirable and flexible terms, leaving the unwanted terms in the original trust and not binding on the assets. Decanting is also a streamlined option for easily transferring a trust from one state jurisdiction to another more favorable jurisdiction, such as South Dakota, with directed and asset protection trust statutes.

Steve Oshins’ findings regarding South Dakota’s decanting statute are particularly compelling when considered in conjunction with the fact that South Dakota…

  • Is generally regarded by most practitioners and academics, including Steve Oshins, as being the best Dynasty Trust state.
  • Unequivocally has the most robust privacy laws in the country, as pointed out by an article appearing in the January 2020 edition of Trusts & Estates magazine comparing U.S. trust jurisdictions wherein the authors noted, “Of the top tier trust jurisdictions, South Dakota has the best trust privacy laws.”
  • Is one of only two states with a Community Property Trust, a compelling tax planning tool for spouses.
  • Is the only state in the country with the Family Advisor, referred to as a “Trust Protector Light.”
  • Has one of the lowest insurance premium taxes in the nation at 8 basis points.
  • Is the most fiscally sound among all top tier trust jurisdictions.

When all of these attributes are considered in the aggregate, South Dakota clearly emerges as the superior trust jurisdiction in the nation. Click here for a well-researched chart comparing the leading U.S. trust jurisdictions, with a particular emphasis on areas that clearly distinguish South Dakota as the superior trust jurisdiction in the overall analysis.

For a more detailed discussion about decanting and how it modifies irrevocable trusts that were once considered unchangeable, click here for a video on the concept and how it works in the planning process.

Please contact Bridgeford Trust via our contact page if you have any questions on decanting and the power of the South Dakota Advantage.

Delivering Direction and Control Podcast Series – Episode 8 with Marty Jackley, former South Dakota Attorney General

Episode 8 is now available on Bridgeford Trust Company’s Delivering Direction and Control Podcast Series! Head on over to our podcast page at bridgefordtrust.com/podcasts to hear the latest episode!

Episode 8 features David WarrenCo-Founder/Chairman of the Board of Bridgeford Trust Company and President/CEO of Bridgeford – and guest Marty Jackley – current Partner at Gunderson, Palmer, Nelson, and Ashmore, who has also served as South Dakota’s Attorney General, United States Attorney for South Dakota, and Chairman of the Nation’s Attorneys General. David and Marty’s discussion includes background on his work as a prosecutor, Marty’s campaign for Governor of South Dakota, as well as his Supreme Court Practice with Wayfair and work on the Kaestner case.

Our Podcast Series was developed to educate, challenge, and inspire listeners. As we interview experts in the trust planning arena, we will keep listeners updated on developments regarding modern trust law and provide practical discussion on the powerful planning opportunities available to advisors around the country and the world – all in an effort to deliver far more direction and control to clients and their advisors than ever before.

We hope you enjoy Episode 8!

Bridgeford Trust to Sponsor STEP Orange County’s 2020 Conference

Bridgeford Trust is excited to be sponsoring the 9th Annual Institute on Tax, Estate Planning and the World Economy, presented by STEP Orange County. Taking place on February 3rd and 4th in Newport Beach, CA, this much anticipated conference presents the latest issues for U.S. and international private client planning.

For a myriad of reasons, including asset protection and privacy, international families from around the world are seeking U.S. trust solutions, and looking specifically to South Dakota because of its leading and progressive modern trust laws. Below are links to educational pieces that may be of interest to advisors working in the international space with clients interested in a U.S. trust solution.

Foreign Grantor Trust
https://bridgefordtrust.com/what-we-do/foreign-grantor-trust/

Common Reporting Standard
https://bridgefordtrust.com/common-reporting-standard/

Our team will be attending the conference and if you are going to be there as well, we encourage you to visit Bridgeford Trust’s exhibit booth and talk with us about how we may be able to collaborate to best serve the international community.

STEP is a global professional association for advisors specifically specializing in family inheritance and succession planning in the international space. STEP works to improve public understanding of issues facing international families, promote education, and strongly encourage very high professional standards among their members and practitioners. To learn more about STEP, click here.

If you would like additional details about the event, visit the conference website at https://stepoc.org/2020-institute/.

In case you missed it…

Join Bridgeford Trust Company, along with Venable LLP and Coastal Bridge Advisors, after the STEP OC conference for a very timely and highly informative multidisciplinary presentation with advisors and professionals, all of whom routinely advise families on powerful state tax planning strategies. Our presenters will examine the evolution of case law and tax regulation, with a specific focus on practical and applicable information on compelling state tax planning concepts that participants can include in overall wealth planning.

This presentation will be available on the following dates and in the following locations. Click on the links below to register today!

Wednesday, February 5 – Los Angeles, CA

Venable’s office at 2049 Century Park East, Suite 2300, Los Angeles, CA 90067
CLICK HERE TO REGISTER

Thursday, February 6 – San Francisco, CA

Venable’s office at 101 California Street, Suite 3800, San Francisco, CA 94111
CLICK HERE TO REGISTER

The events will begin at 5:00 p.m. The presentation (approved for CLE and CPE) will take place from 5:30 p.m. to 7:00 p.m., and a networking reception will follow until 8:00 p.m. Contact us via our contact page with any questions. We look forward to seeing you in California!

Bridgeford Trust to present “State Tax Planning Using Trusts” in Los Angeles, California – February 5th

In light of changes in the federal tax code and recent favorable tax cases, state tax planning using trusts has emerged as a powerful tool; this was most recently affirmed and validated by the Supreme Court’s unanimous decision in the Kaestner case and the Court’s Denial of Cert. in the Fielding case. Simply by selecting the proper trust jurisdiction (a no income tax state), taxpayers in high income tax states can avail themselves of compelling state tax savings – particularly in the areas of taxation on undistributed trust income and capital gains tax on the sale of low-cost basis assets, such as closely held stock and property.

Join Bridgeford Trust Company, along with Venable LLP and Coastal Bridge Advisors, for a very timely and highly informative multidisciplinary presentation with our advisors and professionals, all of whom routinely advise families on powerful state tax planning strategies. Our presenters will examine the evolution of case law and tax regulation and how this evolution impacts wealth planning.

Wednesday, February 5 – Los Angeles, CA

Venable’s office at 2049 Century Park East, Suite 2300, Los Angeles, CA 90067
CLICK HERE TO REGISTER

The event will begin at 5:00 p.m. The presentation (approved for CLE and CPE) will take place from 5:30 p.m. to 7:00 p.m., and a networking reception will follow until 8:00 p.m.

We look forward to seeing you there!

Bridgeford Miami – Launch Event on January 22

Bridgeford Miami

David A. Warren, Co-Founder and Chairman of Bridgeford Trust Company and President and CEO of Bridgeford Advisors (dba Bridgeford) ­­— a sister company of Bridgeford Trust Company providing powerful trust planning to wealthy families across the United States and around the world — is extremely proud and enthusiastic to announce the launch of Bridgeford Miami! The Bridgeford Miami office is located at 1221 Brickell Avenue, Suite 900, Miami, Florida 33131 in the heart of Miami’s financial district, referred to as “Wall Street South” by Forbes Magazine.

Recently approved by the Florida Banking regulators for representative offices in Florida, Bridgeford’s expansion into South Florida is a natural progression given our company’s extensive work with advisors in the region and deep commitment to serving U.S. families, as well as Latin American and international families coming to the U.S. Since Bridgeford does not manage assets, and no trust administration will occur in Florida, Bridgeford is an integral partner for advisors and international families who have a desire to avail themselves of the power, sophistication, and flexibility of U.S. and in particular, South Dakota modern trust law — considered the best in the nation by many advisors and commentators around asset protection, privacy, and prudent tax planning.

To learn more about the power of South Dakota trust law, click here for a detailed information piece in English and click here for Spanish.

Many international trust companies have come to the U.S. and obtained trust powers in an attempt to capture the business of international families coming to America, with little understanding of U.S fiduciary law or regulatory requirements. However, Linda M. Voller, CTFA, incoming Bridgeford Trust Company President and CEO, who oversees all trust administration and corporate governance from our two offices in South Dakota, states,

“Bridgeford has been a U.S./South Dakota trust company since its inception in 1993, with origins tracing back to serving the family that founded General Mills, one of America’s largest dynastic families. We fully understand the very important nuances around trust construction, administration, and corporate governance with regard to proper application of U.S. and South Dakota fiduciary law.”

David A. Warren, JD, who will oversee the South Florida expansion, as well as expansion into New York City and California, adds,

“Bridgeford’s deep experience with fundamental U.S. fiduciary principals and regulatory requirements, coupled with our extensive knowledge of foreign grantor trusts; issues facing international families coming to the U.S.; and understanding of important Know Your Customer (KYC) and reporting requirements; will be a powerful differentiator in the market, quickly propelling Bridgeford as a leading trust provider in the region, and beyond, working with large domestic and international families and their advisors from across the nation and around the world.”

Bridgeford Miami Launch Event – January 22, 2020

Bridgeford invites you to join us for its Miami launch event on January 22nd from 4:30pm-7:00pm at Truluck’s (777 Brickell Avenue, Miami)! In addition to enjoying an evening to network and celebrate Bridgeford’s expansion into Florida, the event will also be substantive and informative in nature, with a panel discussion entitled “America as Jurisdiction of Choice for International Families: Planning Issues in the New Year.” The panel will be moderated by Bridgeford and will include several well respected international advisors in the region, in addition to providing complimentary continuing education credit. You can learn more and RSVP for this event by clicking here.

For more information about Bridgeford and this exciting expansion into Miami, please contact us via our contact page.

Bridgeford Trust to Sponsor 54th Annual Heckerling Institute on Estate Planning in January 2020

Bridgeford Trust is excited to once again be a sponsor at the 54th Annual Heckerling Institute on Estate Planning from January 13-17, 2020 in Orlando, Florida.

If you are attending Heckerling this year, we encourage you to visit with us at our exhibit booth (Booth #400) and attend our sponsored receptions on Sunday and Tuesday nights!

Pre-Conference Reception with Akerman, Bridgeford Trust, and Morris + D’Angelo – January 12, 2020

Join us on Sunday, January 12th at 5:00pm as we come together for a cocktail reception in advance of the 2020 Heckerling Institute on Estate Planning. The evening will take place at Hawk’s Landing Golf Club, which is located on the grounds of the Orlando World Center Marriott. Click here to RSVP.

South Dakota Trust Advantage Reception – January 14, 2020

Be sure to join Bridgeford Trust and many other advisors from across the state and around the country, as we celebrate the power of South Dakota trust law on Tuesday, January 14th from 6:00pm – 7:00pm. This reception is located in Crystal A-B on the Convention Floor at Orlando World Center Marriott. The evening will be a great time of food, spirits, and networking with friends and colleagues. Click here to RSVP.

You can keep up-to-date with our activity at Heckerling, by visiting www.bridgefordtrust.com/heckerling2020.

If you have any questions or would like to set up a time to meet with our team, please feel free to contact Melissa Roberson, Marketing Director with Bridgeford Trust Company at mroberson@bridgefordtrust.com.

We look forward to seeing you in Orlando!

Delivering Direction and Control Podcast Series – Episode 7

Episode 7 is now available on Bridgeford Trust Company’s Delivering Direction and Control Podcast Series! Head on over to our podcast page at bridgefordtrust.com/podcasts to hear the latest episode!

Episode 7 features David WarrenCo-Founder/Chairman of the Board of Bridgeford Trust Company and President/CEO of Bridgeford – and guest speaker, Dr. Daniel Kim – Founder and President of Sweetwater Digital Asset Consulting, LLC – for an intriguing discussion on cryptocurrency, including the history of this asset class and how to identify a quality cryptocurrency project. This episode also includes Dr. Kim’s take on the research and advisory services available that provide investors guidance in considering cryptocurrency exposure for their portfolios.

Our Podcast Series was developed to educate, challenge, and inspire listeners. As we interview experts in the trust planning arena, we will keep listeners updated on developments regarding modern trust law and provide practical discussion on the powerful planning opportunities available to advisors around the country and the world – all in an effort to deliver far more direction and control to clients and their advisors than ever before.

We hope you enjoy Episode 7!

Fiscal Soundness: An Important Factor in Trust Jurisdiction Selection

It has been said that the choice of where to place a trust is as important as the decision to create one. Concerns around asset protection, privacy, maintaining control and direction over trust creation and administration, and prudent tax planning — particularly under The Supreme Court’s recent holding in Kaestner — makes selecting the proper trust jurisdiction more important now than ever. As the “devil is in the details” when comparing nuances among top tier trust jurisdictions, objective information and charts comparing the various states — similar to this chart — are important tools for advisors and the families they serve.

An often overlooked, but extremely important factor is a state’s fiscal soundness and stability.  Currently, top tier trust jurisdictions like South Dakota have no state income tax which is one of the factors that renders the state so attractive to planners. However, there is no guarantee this will always be the case which is why evaluating the fiscal strength of a state when selecting a trust jurisdiction is essential. An objective evaluation, considering multiple factors, reveals that South Dakota is unequivocally the most fiscally sound of all the top tier trust jurisdictions.

With respect to the likelihood that South Dakota will ever impose a state income tax, consider the following facts and watch the video below to learn more.

  • South Dakota has a constitutional prohibition against estate and inheritance taxes, and requires a 2/3 vote of both houses of the legislature to impose an income tax.
  • South Dakota has had a balanced budget each year since statehood, and again has one this year.
  • Despite having no income tax, South Dakota ranks 1st out of all 50 states according to The Pew Charitable Trusts research and analysis with respect to tax revenue volatility with an extremely stable state income stream. (Alaska is 50th, Wyoming 48th, Delaware 38th, Nevada 29th, and New Hampshire 7th)  1
  • In terms of debt and unfunded retirement costs with public pensions over 100% funded, South Dakota ranks lowest of all states at 1st. (Alaska is 50th, Delaware 43rd, Nevada 32nd, New Hampshire 26th, and Wyoming 10th)  2
  • South Dakota ranks in the top 10 in budget surpluses for how long the state can run on just rainy day funds.  3
  • South Dakota has a AAA bond rating by all 3 rating agencies, indicating a very strong state government and fiscal presence.  4
  • In 2018, the nonprofit Mercatus Center at George Mason University ranked all the states by fiscal condition considering a number of factors including cash solvency, budget solvency, long run solvency, service level solvency, and trust fund solvency. South Dakota ranked as 2nd, just behind Nebraska. (Wyoming is 6th, Nevada 10th, Alaska 11th, New Hampshire 12th, and Delaware 44th.)  5
  • Finally, South Dakota has the second highest bank assets in the nation, slightly behind Ohio, reporting in excess of $3.16 trillion, ahead of New York and every other top tier trust jurisdiction.

When planning for families and looking to the future, the fiscal soundness of a state is an extremely important factor to consider in conjunction with a careful comparison of each state’s trust laws — particularly with trusts that are designed as dynasty trusts — with the intention to exist for many years, over multiple generations. South Dakota trust law and its relative fiscal soundness, when compared with that of other top tier jurisdictions in the aggregate, clearly indicates that it is the superior jurisdiction in the nation, and the most compelling choice for trust situs.

For more information regarding fiscal soundness and its importance while selecting trust jurisdiction, please contact Bridgeford Trust via our contact page.

 

 

1 https://www.pewtrusts.org/en/research-and-analysis/articles/2018/08/29/tax-revenue-volatility-varies-across-states-revenue-streams.
2 https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2014/fiscal-50#ind4
3 https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2014/fiscal-50#ind5
4 https://en.wikipedia.org/wiki/List_of_U.S._states_by_credit_rating
5 https://www.mercatus.org/publications/urban-economics/state-fiscal-rankings?utm_source=twitter&utm_medium=social&utm_campaign=fiscalrankings2018

Affirmation of Powerful State Tax Planning Using Trusts

In a unanimous decision, the Supreme Court in the Kaestner case struck down North Carolina’s attempt to tax undistributed income of a resident trust properly sitused and administered in a no income tax state like South Dakota. In the same session, the Supreme Court denied cert in Fielding, upholding the Minnesota Supreme Court’s decision also striking down that state’s attempt to tax undistributed trust income within a resident trust. The Court, in both cases, indicated that taxation of undistributed income within a resident trust is a violation of the United States constitution, affirming and validating powerful state tax planning tools available in non-income tax jurisdictions like South Dakota. The decisions underscore the vital importance of selecting the proper trust jurisdiction, and again accentuates that the choice of a state in which to establish a trust is as critical as the decision to create one in the planning process.

The two cases addressed and confirmed that it is violation of both the Due Process and Commerce Clauses for states to tax undistributed income in a trust where the only contact with the state is the domicile of the beneficiary (Kaestner) or the settlor (Fielding). The holdings in both cases provide great clarity and guidance for planners and practitioners, and affirms the power of modern trust law and trust jurisdiction selection. If you missed it, click here for a webinar discussing practical implications of the ruling. In addition, click here for information about compelling state tax planning opportunities using trusts properly sitused in top tier, no-income tax jurisdictions like South Dakota. You can also view an objective and well-researched chart comparing top tier U.S. jurisdictions by clicking here.

For more information on these cases and state tax planning tools, please contact Bridgeford Trust via our contact page.