Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Alaska | South Dakota |
|---|---|---|
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 | 100 No state income tax |
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 | 95 Strong DAPT with 2-year statute of limitations Higher |
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 Comprehensive directed trust and trust protector statutes 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 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.
South Dakota abolished the Rule Against Perpetuities in 1983, allowing trusts to last indefinitely. South Dakota was one of the first states to abolish the RAP and remains a leader in dynasty trust planning.
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.
South Dakota's constitution prohibits a state income tax. This applies to all income including trust income, making it one of the most favorable states for accumulating wealth within a trust.
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.
South Dakota enacted its Domestic Asset Protection Trust legislation in 1997. The statute features a 2-year statute of limitations for fraudulent transfer claims, one of the shortest in the nation. Self-settled spendthrift trusts are permitted.
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.
South Dakota is widely recognized as having the most comprehensive directed trust statutes in the nation. The state allows complete separation of investment and distribution responsibilities with explicit liability protection for directed trustees. Trust protector statutes are equally robust.
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.
South Dakota permits broad decanting with minimal court involvement. Trustees with discretionary distribution authority can decant to new trusts with modified terms, including changes to beneficial interests, administrative provisions, and trust protector powers.
South Dakota is the better choice for most people. Alaska pioneered many trust innovations, but SD has surpassed it with better infrastructure and more trust companies.
You have Alaska connections, assets already there, or value being the 'original' DAPT jurisdiction.
You want the most established trust industry, easier administration, and more trustee options.
Alaska was groundbreaking in 1997. Today, it's like choosing a flip phone because it was revolutionary in 2005. SD has caught up and passed it.