For decades, discussions around international wealth structuring have been dominated by established financial centres such as Jersey, Guernsey, the Cayman Islands and Switzerland.

Yet in recent years, one jurisdiction has quietly emerged as one of the most influential destinations for private wealth planning, not an offshore island, but the U.S. state of South Dakota.

Today, South Dakota is home to one of the world's most sophisticated trust industries, attracting high-net-worth individuals, family offices and international advisers seeking flexible trust legislation, a stable legal framework and long-term succession planning solutions.

While headlines often focus on tax, the reality is far more nuanced. South Dakota's appeal lies not in offering a simple tax advantage, but in providing a modern legal environment that supports effective wealth preservation, governance and intergenerational planning.

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South Dakota Trust Legislation

South Dakota has spent decades developing one of the most progressive trust regimes in the United States. Rather than relying on a single legislative change, the state has continuously refined its trust laws to meet the evolving needs of wealthy families and professional advisers.

Several factors have contributed to its rise:

• Modern and flexible trust legislation that supports a wide range of private wealth structures.

• Strong asset protection provisions designed to safeguard family wealth from future risks, where legally appropriate.

• The ability to establish long-term, or "dynasty", trusts that can preserve wealth across multiple generations.

• Directed trust legislation, allowing investment management, trust administration and distribution decisions to be separated among different specialists.

• A stable legal and political environment backed by the U.S. judicial system.

• A mature ecosystem of professional trustees, trust companies, legal advisers and private wealth specialists.

Collectively, these characteristics have made South Dakota an increasingly attractive jurisdiction for families seeking certainty and flexibility in an ever-changing global environment.

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Why South Dakota Suits International Families

For internationally mobile families, wealth planning is no longer simply about protecting assets. Increasingly, it is about creating structures capable of adapting to changing family circumstances, multiple jurisdictions and evolving regulatory frameworks.

South Dakota trusts are often considered as part of broader planning strategies that may include:

• Multi-generational succession planning.

• Family governance and wealth stewardship.

• Protection of concentrated business wealth.

• Holding diversified investment portfolios.

• Preparing for future liquidity events or business sales.

• Coordinating cross-border estate planning.

• Supporting philanthropic and charitable objectives.

Importantly, these structures are rarely implemented in isolation. They typically form part of a wider strategy involving tax advisers, lawyers, fiduciaries and investment professionals working together across several jurisdictions.

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Tax in South Dakota

One of the most common misconceptions surrounding South Dakota trusts is that establishing a trust in the state automatically delivers favourable tax outcomes.

In reality, tax treatment is determined far less by where the trust is established than by the tax profile of the individuals connected to it.

Factors that require careful consideration include:

• The tax residence of the settlor.

• The residence of beneficiaries.

• The location and nature of the trust assets.

• Domestic trust taxation rules.

• Anti-avoidance legislation.

• Controlled foreign company rules, where applicable.

• Reporting obligations, including CRS and FATCA.

• Estate, inheritance and gift tax considerations.

All jurisdictions approach trust taxation differently. A structure that works effectively for one family may produce very different outcomes for another with different residency, domicile or asset profiles.

For this reason, South Dakota should be viewed as one component of a comprehensive international planning strategy rather than a standalone solution.

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Is a South Dakota Trust the Right Solution?

As South Dakota has grown in prominence as a trust jurisdiction, several misconceptions have emerged. A South Dakota trust is not a tax solution in itself, nor does it automatically reduce a client's tax liabilities. Its effectiveness depends on the tax residence of the settlor and beneficiaries, the location of the assets, and the tax laws of each relevant jurisdiction. Likewise, while these structures are increasingly used by internationally mobile families, they should always form part of a broader cross-border planning strategy supported by coordinated legal and tax advice.

Asset protection is often one reason families consider South Dakota, but it is rarely the only one. Succession planning, family governance, long-term wealth preservation and administrative flexibility are equally important considerations. As with any international structure, the focus should be on the client's objectives rather than the jurisdiction itself. A South Dakota trust is most effective when it complements a well-designed international tax and estate planning strategy.

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Looking Ahead

As private wealth becomes increasingly international, demand for sophisticated trust jurisdictions is likely to continue growing. Families are navigating more complex lives than ever before, often spanning multiple countries, legal systems and generations.

South Dakota has established itself as a leading jurisdiction by offering legislative certainty, administrative flexibility and a highly developed professional services ecosystem. However, its true value lies not in replacing sound tax advice, but in complementing it.

For international tax advisers, the conversation should not be whether South Dakota is "better" than another jurisdiction. The more important question is whether it is the right fit for a client's wider planning objectives.

When combined with robust legal and tax advice across all relevant jurisdictions, South Dakota can play an important role in helping internationally mobile families preserve, govern and transition wealth with confidence.

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About Affinity

At Affinity, we work alongside international tax advisers, private client professionals and family offices to support complex cross-border wealth planning. Our expertise spans international structuring, trust and fiduciary planning, succession strategies and private client advisory, helping advisers deliver coordinated solutions for internationally mobile individuals and families.

If you would like to discuss South Dakota trusts, international structuring or broader cross-border planning opportunities, we'd be delighted to start the conversation.

Contact us at info@affinityco.com