Dynasty Trusts

Dynasty Trusts
“South Dakota was a pioneer in “dynasty trusts,” which allow families to escape estate taxes forever. The state offers iron-clad secrecy for trusts and protection of assets from creditors and former spouses. It also has rules that make it easier for families to set up their own trust company, rather than rely on a bank trustee, and to enhance their control over trust investment decisions. An added attraction: South Dakota levies no state income taxes on investments.

“In the past four years, the amount of money administered by South Dakota trust companies has tripled to $121 billion, almost all of it from out of state, according to the state’s Division of Banking. South Dakota is particularly adept at “creating laws that are conducive to a massive exploitation of a federal tax loophole,” says Edward McCaffery, a professor at the University of Southern California’s Gould School of Law. “We have a tax haven in our midst.”

http://www.bloomberg.com/bw/articles/2014-01-09/south-dakota-dynasty-trusts-tax-haven-for-rich-families

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