Updated April 2026
South Dakota continues to rank as one of the most advantageous states to locate a trust. The advantages of a South Dakota trust is why we launched the LNW Trust Company of South Dakota in early 2023.
Trusts & Estates magazine recently evaluated states based on 25 statutory and practical criteria, including perpetuity rules, taxation, modern trust law reforms, privacy and the availability of regulated or private family trust companies. Based on that analysis, South Dakota remains a top-tier jurisdiction for trusts. Trusts & Estates also cites South Dakota’s repeal of the Rule Against Perpetuities, adoption of the Rule Against Alienation and Suspension of Powers, robust privacy regime, directed trust and trust protector statutes, regulated Private Family Trust Company framework, and discretionary support trust statute as examples of unmatched consistency.
Clearly, South Dakota continues to be a sound choice for the administration of trusts. Two areas where South Dakota trusts stand out are highlighted below:
Dynasty Trusts
South Dakota also continues to hold number one spot among all U.S. states for multigenerational Dynasty Trusts, according to attorney Steven J. Oshins’ research (his rankings are widely regarded as a go-to reference for estate planning professionals throughout the U.S.). The Oshins’ Dynasty Trust rankings1 heavily weigh the fact that South Dakota trusts can last forever, whereas most other states restrict how long trusts can exist (known as rules against perpetuity).
The other weighted factors favoring South Dakota:
- South Dakota has no income tax
- Trust assets can be protected from familial claims asserted by a divorcing spouse and from claims for child support
- Disputes can efficiently be resolved by non-judicial settlement agreement (rather than needing court intervention)
- South Dakota is ranked as one of the most favorable states for trust decanting (i.e. pouring the assets of one trust into a second trust)
- South Dakota is the second-most-favorable venue when it comes to Domestic Asset Protection Trusts (DAPTs), also known as Donor Asset Protection Trusts (see below for more on DAPTs).
Keep in mind that the longer a Dynasty Trust is intended to last, the more critical the role of the trustee, responsible for managing the assets and administering the trust. While individual trustees (family members, business associates, attorneys or CPAs) may know the family well, they are mortal with varying levels of expertise and other demands on their time and capabilities. Naming a corporate trustee or co-trustee, such as the LNW Trust Company of South Dakota, can ensure continuity of administration for the trust and the various beneficiaries for decades to come.
Donor Asset Protection Trusts (DAPTs)
Trust & Estates has also ranked South Dakota in the top tier for Donor Asset Protection Trusts (a.k.a. Domestic Asset Protection Trusts). This type of irrevocable trust is unique in that the person setting up the trust (the donor/grantor/settlor) can be a beneficiary of the trust (a “self-settled trust”) in addition to other named beneficiaries.
As long as there is an independent trustee and assets are transferred to the trust well before any creditor claims arise, a DAPT can protect the settlor’s assets held in the trust, while still allowing that individual to be a beneficiary of the trust. DAPTs are available in less than half of U.S. states.
Trust & Estates notes the ingenuity of DAPTs: “The anti-clawback provisions…incentivize HNW [high-net-worth] families to use their exemption now … to take advantage of the higher exemption amount while allowing settlors to be permissible discretionary beneficiaries of trusts.”
“In South Dakota, permissible discretionary beneficiaries have no property interest in the trust – ‘a discretionary interest is neither a property interest nor an enforceable right.’” In other words, South Dakota law assures individuals that protection of trust assets is paramount.
For some, the ability to request discretionary distributions from a DAPT may outweigh the risk of future interpretations of the applicable law that narrow the scope or protection of this type of trust. South Dakota courts have historically interpreted statutes as to protect the intent of the individuals establishing the trusts.
These recent rankings reaffirm why LNW selected South Dakota as the venue for its second trust company. Doing so provides broader protections for those establishing trusts, allows the duration of trusts to be expanded (indefinitely), and allows for the most flexibility in administration of trusts.
As always, please do not hesitate to reach out to us to explore whether establishing a trust in South Dakota could be beneficial to your estate and legacy planning.
1 State Rankings Charts | oshins
