The Special Purpose Entity is a powerful planning tool because it places a liability umbrella over the individuals filling the roles within the directed trust structure (investment committee, and/or distribution committee members) as well as the trust protector, therefore, protecting them from personal claims connected to their actions in this capacity.
The Special Purpose Entity concept is also used to destroy nexus between in-state trust protectors, investment committee members, and/or distribution committee members, therefore, maintaining the jurisdictional integrity of a resident trust with situs in South Dakota
South Dakota is the only state with a Special Purpose Entity statute. It is an important planning tool as it supports and encourages the benefits associated with selecting South Dakota in the wealth and trust planning process.