Technical article

South Dakota and 'Dynasty Trusts': Where It Ranks and Why

South Dakota has no limit on how long a trust may run.

By Neil Solomon · 3 min read

Picture a family in the United States that wants a trust to serve grandchildren and great-grandchildren. A friend says South Dakota is the place for that. The family asks whether it holds up for a dynasty, meaning a trust meant to run for many generations.

The short answer from our table is that South Dakota ranks ninth of 50 places for lasting generations. Here is what puts it there.

What the law says

South Dakota has no limit on how long a trust may run. Its statute says the old common-law rule against perpetuities is not in force. The state has no income, inheritance or estate tax. Its laws also allow a directed trust, decanting and powers kept by the settlor.

Other US states compare as follows on the length of a trust.

Why it is ninth

Our dynasty lens gives 25% to length of time and 25% to tax. South Dakota scores a full 5 for length. For tax it scores 3.5, because federal trust tax rates up to 37% apply to a US trust. The places ahead of it are Cayman, Bermuda, Jersey, Guernsey, the United Arab Emirates, Hong Kong, the British Virgin Islands and the Isle of Man. All eight of those score 4.5 or 5 for tax.

We also tried a test. We lifted the tax score of US states to 4.5 out of 5, as if federal trust tax did not weigh on them. South Dakota then rises to fifth for lasting generations. Overall it moves from 14th to 12th. This is our calculation, not a tax rule. It shows how much of the gap comes from tax.

What others say

Steve Oshins, a Nevada lawyer, publishes a points chart for dynasty states. South Dakota came first in 2012 (97 points, with Alaska at 95.5 and Nevada at 95) and in 2019 (99.5, with Nevada at 98.5, Tennessee at 95.5 and Alaska at 93.5). He says the top three differ mainly by possible trust length, so the margin is small. A 2015 reader poll in Trust Advisor chose Nevada: Nevada 64%, Alaska 15%, South Dakota 11%, Delaware 10%.

Trusts & Estates puts South Dakota in its top tier in every edition we saw, from 2018 to 2024, with Alaska, Nevada and Delaware, and Tennessee from 2024. It does not name one state. A bank in South Dakota says no limit applies, which matches the statute. A points chart is one lawyer's view. The sources agree on a group of top states, not one.

Who this touches

Your children and grandchildren. A trust that runs for generations needs a trustee who can be replaced and a deed that can be adjusted. South Dakota's laws on directed trusts and decanting speak to that.

The objection

You might say length alone makes a dynasty. It is a fair starting point, and South Dakota meets it. Our table adds tax, flexibility, family claims, trustees and the depth of courts. Places like Cayman or Jersey score higher overall on those, but for a US citizen they add forms such as Form 3520, with a penalty of the greater of US$10,000 or 35% of the property moved.

A few doors

You could read the statute for how long a trust may run. You could ask what federal tax on a US trust would cost at your income.

Which of these would matter most to your great-grandchildren, the length, the tax or the people running it? Share it here, and someone may benefit from your story.

Figures are estimates for planning, based on public data. Date read: October 2026.