Trusts and estates Trust situs
Consider a location – or situs – for your trust that supports your long-term vision.
Choosing 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. It’s critical to choose a location – or situs – for your trust that’s favorable to your long-term vision.
The appropriate jurisdiction for your trust depends on your unique goals and circumstances, and should be explored with legal counsel. We can help you navigate the complexities of trust situs and determine what location might be best for your situation.
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.
If you choose to create 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 the tax advantage.1
Further considerations for the situs
Several factors must be considered when selecting the most favorable situs for your trust. A few of those key issues are:
- Whether the state’s laws govern the administration or interpretation of the trust
- Residences of the grantor, the trustee and the beneficiaries
- Whether the trust is created during lifetime (intervivos) or becomes effective after death (testamentary)
- Type of assets held by the trust
- Physical location of the trust’s assets
Insights from our experts
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