Trust situs

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.

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.1

Further considerations for the situs

Your determination about situs must include several factors in the analysis. This list, by no means all-inclusive, illustrates the complexities in determining a trust’s situs:

  • Whether the state’s laws govern the administration or interpretation of the trust
  • Residence of the grantor
  • Residence of the trustee
  • Residence of the beneficiaries
  • Whether the trust is intervivos or testamentary
  • Type of assets held by the trust
  • Physical location of the trust’s assets

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