Family office in South Dakota: perpetual trusts, privacy and a regulated private trust company

South Dakota abolished the rule against perpetuities in 1983 (SDCL 43-5-8). A trust can therefore last indefinitely, provided the trustee has power to sell the assets. The state levies no personal or corporate income tax, so trust income that is not taxed by another state is free of state tax. Over four decades the legislature has added directed trusts and trust advisers under SDCL chapter 55-1B, domestic asset protection trusts under chapter 55-16 (since 2005), community property trusts, broad decanting powers and statutory privacy. Under SDCL 21-22-28, in any court proceeding about a trust, the trust instrument, inventories, accountings, petitions and orders are sealed on filing and are not part of the public record. Access is limited to the parties, their lawyers and others the court approves. From 1 July 2026, attorneys of record also have secure online access to those sealed files.

The family office itself, meaning the team that invests and administers, is normally located where the family lives, for example in New York, Texas, Florida or abroad. Its adviser status follows the federal family office rule, Rule 202(a)(11)(G)-1. South Dakota's role is to hold the trusts and, often, the family's own trustee. A private trust company chartered under SDCL chapter 51A-6A serves only family members and their trusts and entities. It is chartered and supervised by the Division of Banking, part of the Department of Labor and Regulation. It needs at least US$200,000 of capital, a pledged deposit of at least US$100,000, a fidelity bond of at least US$1,000,000 and D&O cover of at least US$1,000,000. It is examined at least once every 36 months and files an annual report by 30 January. The application fee is US$5,000. Annual supervision fees are 7 cents per US$10,000 of trust assets, with a minimum of US$3,750 and a maximum of US$20,000. Examination costs are typically US$8,000 to US$15,000 for a private trust company.

The directed-trust framework under chapter 55-1B lets families divide roles. An investment trust adviser, often the family investment committee or the office itself, directs investments. A distribution adviser and a trust protector handle discretion and oversight, and a South Dakota trust company acts as administrative trustee. The 2025 legislation (SB 69, effective 1 July 2025) added a tax trust adviser who can direct the trustee on tax matters. It also clarified the line between unilateral decanting and court or consent-based modification. The 2026 legislation (SB 100, effective 1 July 2026) gave trustees discretion to reimburse a grantor for income tax on grantor trust income. It codified attorney-client privilege for trust fiduciaries, added an advancements rule for trusts and clarified the asset protection and community property trust statutes. A South Dakota asset protection trust allows the settlor to be a discretionary beneficiary. Creditors generally have two years from the transfer to challenge it, or, for a creditor whose claim existed at the time, six months after discovery if that is later. Claims for child support and for alimony or property division owed to a spouse at the time of transfer remain exceptions. Courts in other states have not always applied South Dakota law to their own residents, as a 2025 Connecticut appellate decision on marital assets showed.

Privacy in South Dakota is a matter of statute, not secrecy from tax authorities. US trusts and companies remain subject to IRS reporting and FATCA, and trust companies are examined for AML compliance. The Division of Banking expects each trust company to support the South Dakota situs of every account through real in-state administration. Its interstate trust guidance warns that administration carried out elsewhere can weaken the claim to South Dakota law. In practice the structure works when the South Dakota trustee keeps records, holds meetings and makes or implements decisions in the state. That calls for planning in the family office's governance calendar. South Dakota is often compared with Delaware, Nevada and Wyoming. Its distinguishing features are the absence of any state income tax, sealed court records and a long-established private trust company charter.