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Selecting Modern Trust Structures Based on a Family’s Assets - Pat Soldano

By Al W. King III & Pierce H. McDowell III

A round-up of the available options

 

Trusts have grown enormously in popularity since the mid-1990s as a result of the development of modern trust laws, the dramatic increase in wealth and evolving family needs and goals. Modern trust laws promote many key desires of a client’s estate planning, such as flexibility, control, tax savings, asset protection, family values, governance, succession, education and privacy. However, when designing and structuring a client’s estate plan, these key desires may not be properly coordinated with the selection of trustees, the type of trust and the type of trust administration. The assets funding the trust are another key factor that often gets overlooked.

 

Assets funding trusts can be quite diverse, particularly as an individual’s net worth increases. Generally, the current composition of global wealth transfers is:

  • 40 percent privately held businesses
  • 27 percent public holdings
  • 6 percent real estate and luxury
  • 27 percent liquid

This composition varies quite extensively by country (See “Asset Composition,” p. 51).

In the United States, the top 10 percent to 12 percent of households own a large percent of illiquid assets , for example, closely held businesses and real estate, which aren’t generally viewed as ideal assets for the typical trust.  “Popular Trust Assets,” p. 53, summarizes many of the more popular client assets that need to be coordinated with a client’s trusts . Consequently, given the diverse range of assets held by clients, decisions regarding the selection of the type of trust, trustees and trust administration are extremely important.

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About South Dakota Trust Company
South Dakota Trust Company LLC (SDTC) is a national boutique trust company founded by Al W. King III and Pierce H. McDowell III, and headquartered in Sioux Falls, South Dakota. Currently, SDTC has more than $135 billion in assets under administration and $82 billion under agency and currently works with over 115 billionaire and 360 centimillionaire clients who have chosen SDTC as a result of SDTC’s exceptional service, along with South Dakota’s competitive and unique trust, privacy, asset protection, income tax, and private family trust company laws.

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