Pub. 10 2020 Issue 2

15 PUB. 10 2020 ISSUE 2 The benefits are not limited to simply moving an investment portfo- lio. Most high net-worth clients have created wealth through private equity and real estate. South Dakota’s directed trust statute makes it easier for a grantor to fund the trust with real estate, private equity, or other unique holdings, and to discount the value. When this liquidity occurs in the South Dakota ING trust, the intangible income tax is limited, the state capital gains tax is mitigated, and the full proceeds are available for reinvestment at the direction of the grantor. South Dakota trust structures allow tremendous flexibility for the grantor to direct, control and influence the investment of the trust. Privacy and asset protection of ING trusts Privacy and asset protection are two features available in ING trusts that are properly drafted in South Dakota. The following are some notable privacy benefits: • The trust does not need to use a family name for the trust. Additionally, the trust can serve as the organizer of a South Dakota LLC to hold the assets, acquire additional assets, or contract with investment advisors. • The LLC that holds the trust assets does not appear on a list of entities opened in South Dakota, nor is there a list of the owners of the LLC. • Acquisitions or sales of private holdings can be made through the LLC, with a client directing BTC Trust Company of South Dakota to sign documents. This allows the family to direct an acquisition through an anonymous channel, keeping the family name off the potentially public records. Asset protection is an available feature of a properly drafted South Dakota trust with a South Dakota LLC as an asset. Any lawsuit targeting the assets of the trust, the grantor, or the beneficiaries must occur in South Dakota. All lawsuits involving trusts are au- tomatically sealed in perpetuity, and there will be no public record of the proceedings. Since the LLC is the owner of the assets, it is the LLC that is sued. South Dakota only provides a charging order, which is similar to a garnishment, as a remedy for those who would sue. There is no judicial foreclosure. Even if the charging order is in place, the cash distributed from the LLC to the trust cannot be collected if we use the proper South Dakota discretionary bene- ficiary language. When properly drafted, the beneficiaries do not have an income interest in the distribution, nor a property inter - est in the trust that can be collected by the plaintiff’s attorney. These barriers to successful suit collectively provide tremendous asset protection. w Nate Birkholz is Vice President and Managing Director of Private Client Services at Bankers Trust. He joined the bank in 2017 as president of BTC Trust Company of South Dakota and has over 20 years of experience working with trusts, estates, and investment services. He can be reached at NBirkholz@BankersTrust.com. B A N K E R S ’ B A N K • O F T H E W E S T • 800-873-4733 | www.bbwest.com Our mission: TO CHAMPION COMMUNITY BANKING PATTY PINSON Operational Services ppinson@bbwest.com PAUL HARRISON Lending Services pharrison@bbwest.com IN BUSINESS TO FURTHER YOUR BUSINESS • Loan participations and bank stock loans • ATM/debit and merchant processing programs • Operations • Cash management • Safekeeping