When someone thinks of a tax haven, pictures of exotic tropical islands, snowy mountain peaks, or sultry jungles come to mind as the preferred destination of someone looking to hide money. But what about a barren prairie with nary an undulation in the topography to be seen? Turns out one of the hot new tax havens can be found in South Dakota due to it’s strict privacy laws concerning trust, abandonment of the rule against perpetuities, and a lack of a state income or estate tax. An estimated $175 billion is currently held by trusts in the state which represents a huge increase in recent years. Out of state residents, and an increasing number of foreign nationals, have taken advantage of the fact that no residency in the state is needed to take advantage of the favorable trust and estate laws. However critics have been quick to pounce on the fact that little direct benefit has been brought to the state aside from satellite offices set up by banks and law firms. But in any case, the boom is not likely to end anytime soon as all indications point to the state continuing it’s embrace of the rich and their desire to stash cash.
See Drew Matthews, Why South Dakota is a tax haven for the rich, Rapid City Journal, April 10, 2016.
