Privacy Trust Laws
Privacy begins with trust jurisdiction.
Privacy has 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’s nationally recognized privacy and quiet trust statutes provide individuals and families with a level of confidentiality that few jurisdictions can match, making the state a preferred trust jurisdiction for those seeking discretion, long-term privacy, and sophisticated wealth planning.
South Dakota’s Privacy Trust Laws
These statutes are designed to provide privacy, not secrecy, helping protect sensitive family and trust information.
Privacy Protections
South Dakota’s Total Seal Statute
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 three years. This is a major departure from South Dakota’s statute that seals trust information from the public forever without the need to petition for a court decree. Therefore, South Dakota’s privacy trust laws are clearly superior to that of any other state in the nation and are generally regarded by many practitioners, advisors, and academics as being among the best in the world.
Trust Confidentiality
Quiet Trusts
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 Investment Advisor or 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.
To assist families and their advisors in evaluating trust jurisdictions, Bridgeford Trust Company has developed a comprehensive comparison of top-tier U.S. trust jurisdictions, including a detailed look at trust privacy provisions and other modern trust laws that distinguish South Dakota as the superior trust jurisdiction in the overall analysis.
Questions About Privacy Trust Laws?
If you would like to learn more about South Dakota’s privacy trust laws or explore other advantages available under South Dakota trust law, reach out to us through our contact form or call us at (605) 224-9189.
