Dynasty Trusts: Why South Dakota Continues to Lead

For more than a decade, South Dakota has been recognized as the leading jurisdiction for Dynasty Trusts—and that distinction remains unchanged in the most recent 2025 Dynasty Trust Rankings published by Nevada attorney, Steve Oshins. Understanding the vital importance of selecting the proper trust situs in the planning process, Oshins produces these annual ranking charts to demonstrate the differences among the states and rank them according to usability, flexibility, and legal advantages.

South Dakota was the first state in the nation to abolish the Rule Against Perpetuities—which prohibited unlimited-duration trusts—in 1983, clearing the way for the creation of the Dynasty Trust. A South Dakota Dynasty Trust continues to be a very powerful planning tool that preserves family wealth over generations, allowing a trust to live in perpetuity (forever), therefore never subjecting the assets to federal estate taxation through a forced distribution.

Available to both residents and non-residents, South Dakota Dynasty Trusts require only that the trustee be a South Dakota resident and that South Dakota laws apply to the trust. In addition to long-term wealth preservation, these trusts provide significant tax advantages, reducing the burden on successive generations while still allowing beneficiaries access to the assets during their lifetimes.

Why Dynasty Trust Jurisdiction Matters

The decision as to where to create a trust is critical, and since Dynasty Trusts are governed by state law, it’s important to look closely at the chart to understand the details behind the rankings. While several states promote Dynasty Trusts, many have merely amended the Rule Against Perpetuities to extend the time when a trust must terminate and also lack the progressive modern trust laws available in South Dakota.

Below are some of the key advantages of South Dakota Dynasty Trusts:

• No State Taxation: South Dakota does not impose any form of taxation (income, dividend interest, capital gains) on trust assets, creating significant tax savings for families. This was reinforced by the Supreme Court’s Kaestner ruling, where it was held that it is unconstitutional for a state to tax undistributed trust income properly sitused and administered in a no income tax state like South Dakota (learn more about the Kaestner case).
• Strong Asset Protection: Whether structured as self-settled or third-party trusts, South Dakota Dynasty Trusts can incorporate spendthrift provisions to prevent future creditors (including former spouses) from directly accessing trust assets.
• Unmatched Privacy Protections: South Dakota offers the strongest privacy trust laws in the nation, with a total, non-discretionary seal on trust information forever. Unlike other states that have no or limited privacy provisions, South Dakota’s privacy laws ensure confidentiality forever.
• Greater Control & Flexibility: With modern trust planning tools like Directed Trusts and Trust Protectors, settlors of trusts, beneficiaries, and their advisors can maintain significant control and direction over trust creation, administration, and modification, through the use of South Dakota’s powerful decanting statute, considered the best in the nation.
• Sophisticated Planning Tools: South Dakota uniquely offers the Special Purpose Entity, Community Property Trusts, and the Family Advisor—planning tools not available in other U.S. trust jurisdictions. These modern trust laws are the reason why advisors, industry experts, and publications continue to rank South Dakota as a top-tier U.S. trust jurisdiction.

We encourage you to review Bridgeford Trust Company’s jurisdiction comparison chart to see where the top-tier jurisdictions rank in terms of Dynasty Trusts. This chart also illustrates many other progressive trust topics and laws that distinguish South Dakota as the best U.S. trust jurisdiction in the overall analysis.

You can also watch a video about Dynasty Trusts on Bridgeford’s YouTube channel to learn more about its history, how they work, and why South Dakota continues to rank as the top Dynasty Trust state in the nation.

For more information on the Dynasty Trust and how it combines with South Dakota’s modern trust laws to create this powerful planning opportunity for advisors and their clients, please contact Bridgeford Trust Company’s team at (605) 224-9189 or online.

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McKonly & Asbury is able to offer an extension of trust and fiduciary services to our clients and friends of the firm through our partnership with Bridgeford Trust Company. As a fully independent trust company chartered in South Dakota, Bridgeford Trust Company provides conflict-free and innovative fiduciary services and progressive U.S. modern trust law solutions around asset protection, privacy, and tax planning to domestic and international families across the country and around the world.

You can learn more about Bridgeford Trust Company and the South Dakota Advantage at www.bridgefordtrust.com.

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