Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Alaska | Delaware |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 95 1,000 years | 100 Perpetual Higher |
State Income Tax Does the state impose income tax on trust income? States with no income tax or favorable trust taxat... | 100 No state income tax Higher | 85 No tax with conditions |
Asset Protection How strong are the state's Domestic Asset Protection Trust (DAPT) laws? Key factors include statute ... | 88 First US DAPT state (1997) with 4-year statute of limitations | 88 Strong DAPT with 4-year statute of limitations |
Directed Trust & Trust Protector Does the state have robust statutes for directed trusts (separating investment and distribution duti... | 92 Comprehensive directed trust and trust protector statutes | 100 Most comprehensive directed trust statutes in the US Higher |
Decanting Flexibility How easily can trust terms be modified through decanting? Broader decanting powers allow for greater... | 90 Broad decanting powers with notice requirement | 95 Broad decanting powers with 60-day notice Higher |
Alaska allows trusts to exist for up to 1,000 years, measured from the date of trust creation. This applies to both real and personal property held in trust. While not perpetual, 1,000 years is effectively dynastic for any planning purpose.
Delaware abolished the Rule Against Perpetuities for interests in trust property effective July 1, 1995. Trusts can continue indefinitely with no durational limit, making Delaware one of the premier dynasty trust jurisdictions.
Alaska has no state income tax. The state relies on oil revenues and other sources rather than income tax. Trust income is not taxed at the state level, and Alaska residents receive annual Permanent Fund Dividends.
Delaware does not tax trust income if: (1) all current beneficiaries are non-Delaware residents, (2) there is no Delaware-source income, and (3) trustee location alone does not create tax nexus. Delaware statutory trustees/directed trustees do not create income tax liability by themselves.
Alaska enacted the first US Domestic Asset Protection Trust statute in 1997. The statute of limitations for fraudulent transfer claims is 4 years from transfer or 1 year from discovery, whichever is later. This is longer than some competing jurisdictions.
Delaware's DAPT statute requires creditors to prove fraudulent transfer by 'clear and convincing evidence' - a higher standard than typical civil cases. The 4-year statute of limitations (or 1 year from discovery, whichever is later) provides strong protection after seasoning.
Alaska has comprehensive directed trust and trust protector statutes. The statutes allow separation of trustee powers among multiple parties with explicit liability protection. Trust protectors can be granted broad powers including modification of trust terms, removal of trustees, and change of situs.
Delaware is widely recognized as having the most sophisticated directed trust statute in the nation. The statute allows complete separation of administrative, investment, and distribution functions with explicit liability protection. Trust protectors can be granted broad powers and are not fiduciaries unless the trust instrument provides otherwise.
Alaska's decanting statute (enacted 2014) allows trustees with discretionary distribution authority to distribute to new trusts with modified terms. No court approval is required. Decanting can modify administrative and dispositive provisions, merge or divide trusts, and extend trust terms.
Delaware's decanting statute is one of the most permissive in the nation. Trustees with discretionary distribution authority can decant to new trusts with modified terms, extend trust duration (perpetual in Delaware), and change situs. No court approval required.
Delaware for legal sophistication and complex trusts. Alaska has no income tax but less developed case law. These serve different needs.
No state income tax is priority and you have Alaska connections.
You need sophisticated case law, expect litigation, or have complex structures.
Rarely does someone genuinely need to choose between these two. If you do, it's probably Delaware—the case law advantage matters more than you'd think when things get complicated.