Shenkman Law

Client PortalClient Login
  • Services
  • The Firm
  • Blog
  • Newsletter
  • Press & Awards
  • Resources
  • Webinars
  • Podcasts
  • Contact
« Back

    Trust Friendly States

    WealthManagement.com
    Sep 15, 2015

    Martin M. Shenkman 

    Most folks (and lawyers) tend to set up trusts in the state where they live and their
    lawyer practices. While this might seem logical has historically been the norm, it
    may not be the optimal approach in many cases. The use of trust friendly
    jurisdictions has become commonplace, and for some practitioners, the default
    choice in structuring a trust. For estates that face a federal estate tax or which might
    absent the trust planning involved, as well as for clients concerned about asset or
    divorce protection, it can be advantageous to have that client’s trust created in one of
    these better jurisdictions and have the law of that jurisdiction apply to the trust,
    instead of the client’s home state.

    The most popular trust friendly jurisdictions are: Alaska, Delaware, Nevada and
    South Dakota.

    The following illustrates some of the many advantages one of the premier trust
    friendly jurisdictions can afford to a trust. While the advantages can be significant,
    some lawyers assume that the courts in the so-called trust friendly jurisdictions will
    “rubber stamp” any request made for a trust. Two recent cases make clear that, while
    these jurisdictions remain trust friendly, don’t presume that means their courts will
    do anything you want. The Delaware courts, for example, will endeavor not to step
    on the toes of courts in other jurisdictions. Further, the mere fact that beneficiaries
    unanimously agree to make certain changes to a trust doesn’t assure that the court
    will consent to the requested change if it violates the settlor’s intent as evidenced in
    the governing instrument. Some believe that the Delaware Courts are becoming less
    inclined to rule on non-adversarial cases. None of this detracts from the many
    advantages the trust friendly jurisdictions can afford or the suggestion that using
    those jurisdictions as the default plan when forming a complex trust should change.
    Perhaps it’s merely a sign of the growing use of these jurisdictions, the maturation
    of modern trust drafting and the delineation of reasonable boundaries as to the
    flexibility of modern trust drafting in practical terms.

    Read his commentary here.

    No related posts.

© 2023 Shenkman Law
  • Services
  • The Firm
  • Blog
  • Press & Awards
  • Resources
  • Contact
  • Privacy Policy
  • Site Map
  • Code of Ethics
  • ADV 2A Firm Brochure
  • Chronic Illness
  • LawEasy