Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | South Dakota | Wyoming |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 100 Perpetual Higher | 95 1,000 years |
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 Higher | 90 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... | 100 Comprehensive directed trust and trust protector statutes | 100 Comprehensive directed trust and trust protector statutes |
Decanting Flexibility How easily can trust terms be modified through decanting? Broader decanting powers allow for greater... | 95 Broad decanting powers | 95 Broad decanting powers |
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.
Wyoming abolished the Rule Against Perpetuities in 2003, allowing trusts to last up to 1,000 years. While not perpetual, this effectively provides dynastic duration for any practical planning purpose. The 1,000-year limit applies to both real and personal property.
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.
Wyoming'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 grantor residence.
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.
Wyoming enacted its Qualified Spendthrift Trust statute in 2007. The 2-year statute of limitations for fraudulent transfer claims is competitive with South Dakota and Nevada. Self-settled spendthrift trusts are permitted.
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.
Wyoming has comprehensive directed trust and trust protector statutes enacted in 2011 and expanded since. The statutes allow complete separation of trustee duties 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 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.
Wyoming's decanting statute (enacted 2013) provides broad powers. Trustees with absolute discretion can decant to new trusts with virtually any modified terms. Even trustees with limited discretion can change administrative and governance provisions. No court approval required.
SD is the safe choice; Wyoming is the value pick. Wyoming has caught up on laws but lacks SD's established trust industry. Great for cost-conscious grantors.
Minimizing fees is critical, your trust is $1-5M, and you're comfortable with a smaller trust industry.
You want the safest, most battle-tested option with the most trustee choices.
Wyoming is the sleeper pick. Most advisors default to SD because it's safe, but Wyoming offers 90% of the benefit at 70% of the cost. Worth serious consideration if fees matter.