Article on South Dakota DAPTs Removing Assets from Settlor’s Estate

Mark R. Krogstad & Matthew W. Van Heuvelen recently published an Article entitled, Domestic Asset Protection Trusts: Examining the Effectiveness of South Dakota Asset Protection Trust Statutes for Removing Assets from a Settlor’s Gross Estate, 61 S.D. L. Rev. 378 (2016). Provided below is an abstract of the Article:

Various states have enacted legislation allowing for the creation of self-settled spendthrift trusts in the last decade. This recent trend of legislation has given rise to domestic asset protection trusts (“DAPTs”). The enactment of DAPT laws in South Dakota and various other states has caused debate as to whether transfers to such trusts can be structured as completed gifts for federal gift tax purposes and whether the assets transferred to such trusts by a settlor can effectively be removed from a settlor’s gross estate for federal estate tax purposes. This article will discuss why recent changes to South Dakota’s DAPT statutes likely provide settlors the option of reducing their gross estates by making completed gifts to self-settled trusts sitused in South Dakota.