Privacy and Confidentiality: Controlling Information About Wealth

In a recent article, “Protecting Families of Wealth from Themselves: Lessons from HBO’s Succession,” Bridgeford Trust Company examined how poor planning and lack of governance can lead to destructive family dynamics and the erosion of wealth across generations. The Roy family’s fictional struggles illustrate the real-world importance of strategic trust planning, modern trust laws, and effective family governance—ultimately, protecting families of wealth from themselves.

One of the most understated but critical elements in preserving wealth and family harmony is privacy. Throughout Succession, the Roy family was wrought with conflict and power struggles, fueled by the siblings’ (next generation’s) full awareness of the extent of the family’s extreme wealth and expansive business empire. This “transparency” created intense competition over who was going to control, and ultimately take over, the family’s sprawling business operations, as well as lead the family after Logan Roy’s death. It is often persuasively argued that full access to information about family wealth and business operations, particularly for young adults, is detrimental to the growth and development of next and subsequent generations for a myriad of reasons, many of which were depicted in Succession.

South Dakota’s Privacy Laws

A solution to this issue is found in South Dakota’s privacy trust laws, considered the strongest and most comprehensive in the nation. Privacy has always been of paramount concern to wealthy families and is one of the primary reasons why billions of dollars have been and are being moved into South Dakota for trust administration from around the globe.

Quiet Trusts

Unlike most states, which require trustees to inform beneficiaries of their interest in a trust at age 18, South Dakota offers unmatched flexibility through its quiet trust statute. This statute allows the settlor, trust protector, and advisors (investment or distribution) to expand, restrict, eliminate, or modify the rights of the beneficiaries to discover information about a trust.

Simply restricting access to information about the full extent of family wealth can be a powerful method of protecting next and subsequent generations from themselves as they grow into and come to understand the responsibility of extreme wealth through proper education and communication.

South Dakota’s Total Seal

South Dakota’s privacy statute also provides for a total seal forbidding the release of trust information, including names of settlors, beneficiaries, and the contents of a trust, to the public during litigation. Most states do not have privacy statutes specific to trusts and, as such, privacy is not mandated or guaranteed by law as it is in South Dakota.

Of the states that do have privacy provisions, most only limit privacy for a certain duration (Delaware is three years); then the information is released to the public, and the privacy provisions are subject to the court’s discretion, which is routinely denied.

In contrast to the public unraveling of the Roy family, real-life families of wealth can preserve harmony and mitigate conflict through intentional privacy planning. South Dakota’s privacy trust laws are clearly superior to those of any other state in the nation and are universally considered by advisors and academics to be among the best and most comprehensive in the world.

If you have any questions or are looking for further information about South Dakota’s privacy provisions and how they can be incorporated into a wealth plan, 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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