Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Nevada | South Dakota |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 100 Perpetual (personal property) | 100 Perpetual |
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 ... | 95 Strong DAPT with 2-year statute of limitations | 95 Strong DAPT with 2-year statute of limitations |
Directed Trust & Trust Protector Does the state have robust statutes for directed trusts (separating investment and distribution duti... | 98 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... | 92 Broad decanting powers with notice requirement | 95 Broad decanting powers Higher |
Nevada abolished the Rule Against Perpetuities for personal property in 2005. Trusts holding financial assets, securities, and business interests can continue indefinitely. Real property interests remain subject to the common law RAP.
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.
Nevada's constitution prohibits state income tax. This applies to individuals, corporations, and trusts. Trust income is not taxed at the state level regardless of trustee location, beneficiary location, or income source.
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.
Nevada has one of the strongest DAPT statutes with a 2-year statute of limitations for fraudulent transfer claims. The state allows self-settled spendthrift trusts and has fewer exception creditors than many 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.
Nevada has comprehensive directed trust statutes allowing separation of trustee duties. Investment advisors and distribution advisors can direct the trustee with explicit liability protection. Trust protector powers are broadly defined and can include powers to modify trust terms, remove trustees, and change 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.
Nevada's decanting statute allows trustees with discretionary authority to distribute trust property to new trusts with modified terms. No court approval is required. Decanting can add trust protector provisions, change administrative provisions, and modify beneficial interests in many cases.
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.
Both are top-tier. Nevada edges SD on asset protection; SD has better trust company infrastructure. For most people, you can't go wrong with either.
Asset protection is your absolute #1 priority, or your attorney has Nevada expertise.
You want the most established trust industry and broadest trustee selection.
This is like asking iPhone or Android. Both work great. Pick the one your attorney knows better. If all else is equal, SD's trust industry is slightly more developed.