Choose a state with trust-friendly laws
Where your irrevocable trust is administered has an important impact. Different jurisdictions in the United States offer different opportunities. Choose a location—or situs—for your trust that is favorable to your long-term vision. You might consider creating an irrevocable trust in a state that doesn't have state fiduciary income tax. Your trust will need to be administered in that state to realize that tax advantage.1
The appropriate jurisdiction for your trust depends upon your own unique goals, facts and circumstances, and should be explored with legal counsel.
Key considerations:
- Estate and fiduciary income taxes
- Creditor protection
- Privacy
- Duration
Frequently preferred jurisdictions:
- Delaware
- Nevada
- South Dakota
State fiduciary income taxes
While irrevocable trusts in the United States cannot escape federal fiduciary income taxes, a number of states (such as Nevada and South Dakota) require no state fiduciary income tax. Also, Delaware, New Hampshire and Wisconsin exempt trusts with non-resident grantors and non-resident beneficiaries from state fiduciary income tax.
Insights
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