Asset Protection Benefits of a South Dakota Trust (Video Transcript)

South Dakota provides some of the clearest and strongest protection features for trusts properly drafted in South Dakota. The features are multi-faceted and protect personal assets in three ways.

  • First, the trust organizes a South Dakota LLC to hold the assets. This additional level of protection is not subject to judicial foreclosure, and the sole remedy is a charging order, which is similar to a garnishment.
  • Second, distributions from an LLC must first go to the South Dakota trust, which has strong statutory standards of protection. South Dakota language protects against collection efforts because discretionary beneficiaries do not have an income or property interest in the distribution.
  • Third, this means the beneficiaries can still receive income and principal at the discretion of their Distribution Trust Advisor, but creditors face significant hurdles to collection when there is no income interest or property interest.

Asset protection is one of the differentiators between trusts drafted in South Dakota and other states. Around the country, case law, and the opinions written by individual judges, have led to a variety of standards and unpredictable results.

Learn more about the benefits of South Dakota trusts at Education.BankersTrust.com.