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Comment by LeanderK | Hacker News Reader

So what taxes does South Dakota actually levy on the trusts? I doubt the beneficiaries actually live in South Dakota and setting up a trust does not imply the movement of businesses. Does South Dakota gain much from this tax haven-laws?

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The trustee must live in South Dakota for at least half the year. I'm unsure if there are any other taxes involved but it at least creates a number of high income financial jobs in the state.

South Dakota has a lot of financial jobs (check where your credit card is issued from) and benefits quite a lot from their tax structure.

They have no income tax but do sales taxes.

That's another quirk of South Dakota law. Essentially the state has no limit on interest rates, which is why all the credit card companies have offices there.

Do they really though? For some coastal elite business tycoon, is the estate tax scheme worth spending half a year in SD?

The tycoon just needs to hire someone to live in South Dakota, they don't need to be the trustee.

It's like any tax haven, a law firm is the trustee and the lawyers need to live in SD half the year.

Where did you read that? My understanding is the trustee need never set foot in the state to receive full asset protection under state law.

I think you're confused as to who the trustee is, they are the one who legally owns the money but has no legal right to use it. The people who can receive/use the money are the beneficiaries, and the people putting money into a trust are the grantors.

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