Now South Dakota and other states are getting into the act, as The Wall Street Journal (subscription) noted recently.
"Between 1985 and 2003," according to one study, "some $100 billion—about 10% of reported trust assets held by federally regulated financial institutions—moved to states that allowed long-term trusts and didn't tax trusts created by nonresidents."
About half a dozen states are actively vying to attract wealthy families' trusts, as well as the jobs and tax revenue that come from the companies that administer these estate-planning vehicles.
States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.
More recently, the trust-company battle cry seems to be "South Dakota or Bust!" Trust Advisor points out that this "tax-friendly asset protection jurisdiction" also draws fiduciary start-ups by means of lenient capital requirements. "A new company only needs to post $200,000 for a South Dakota charter, versus up to $1 million elsewhere."
Will a handful of states end up hosting the lion's share of dynastic and asset-protection trusts?
Will Citibank's most celebrated South Dakota employee decide to switch to a new, fiduciary career?