Special Purpose Entity
Protecting the people behind the trust.
A Special Purpose Entity (SPE) is a powerful planning tool because it places a liability umbrella over the individuals serving within the Directed Trust structure—including Investment Committee members, Distribution Committee members, and the Trust Protector—helping protect them from personal claims arising from actions taken in those roles.
The Special Purpose Entity also eliminates nexus between in-state Trust Protectors, Investment Committee members, and Distribution Committee members, helping preserve the jurisdictional integrity of a resident trust with situs in a progressive trust jurisdiction such as South Dakota.
South Dakota’s Special Purpose Entity
A Unique Advantage
South Dakota’s Special Purpose Entity Statute
South Dakota was the first state to enact dedicated Special Purpose Entity legislation and remains one of a small number of jurisdictions with a statutory framework expressly recognizing these entities. Under South Dakota law, the sole legal purpose of the Special Purpose Entity is to direct an Administrative Trustee, such as Bridgeford Trust Company, with respect to trust investments, distributions, and Trust Protector functions within the Directed Trust framework.
The SPE is an important planning tool because it supports and enhances the benefits of selecting a progressive trust jurisdiction, such as South Dakota, during the wealth and trust planning process.
Questions About the Special Purpose Entity?
If you would like to learn more about South Dakota’s Special Purpose Entity 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.
