Go ahead and like this video and subscribe to our YouTube channel! Today, we’re going to talk about asset protection trusts and how we got to where we are today, with a brief overview of the history and development of these trusts.
Historically, you could not set up a trust for your own benefit—known as a self-settled trust—fund it with your own assets, and have those assets be protected from creditors, lawsuits, divorcing spousal claims, or other types of legal risks. The only way to accomplish this type of asset protection was if someone else, a third party, set up a trust for your benefit, funded it with assets, and then those assets would be protected from any type of creditor claims.
However, all of this changed back in the 1980s when the Cook Islands, a small Polynesian country off the coast of New Zealand, passed the first self-settled asset protection laws in the world. This changed the trust industry everywhere. Shortly thereafter, states in the U.S. started passing similar asset protection trust statutes, allowing people to set up trusts for the purpose of creditor protection.
Today, Nevada and South Dakota are recognized as the premier asset protection trust jurisdictions in the country, with South Dakota being the top choice overall due to its privacy laws, asset protection statutes, favorable tax laws, and options for dynastic planning. We can discuss dynastic planning in more detail in another video.
One thing to keep in mind is that even though other states are passing asset protection trust statutes, it doesn’t mean that all these jurisdictions are equal. Even if you’re located in a state that has asset protection trust statutes, it’s still worth considering South Dakota, as it’s likely to be more advantageous due to its robust legal framework.
While different states continue to pass new laws, South Dakota and Nevada remain at the forefront, constantly modernizing and improving their trust laws, with South Dakota leading the way.
If you’re considering asset protection strategies, it’s crucial to explore your options and see if a South Dakota trust is the right fit for you. Stay tuned for more content, and as always, don’t forget to like and subscribe!