Probate & Trust Law Section Conference Manual ... - Minnesota CLE

13. SPENDTHRIFT TRUSTS
As previously discussed, only a few trust jurisdictions have self-settled domestic asset protection
statutes. However, most jurisdictions, also including South Dakota, offer some asset protection
through incorporation of spendthrift provisions into a trust. 247 A spendthrift clause prevents all
but exception creditors from attaching a trust. A beneficiary, however, may still have an
enforceable right to a distribution, which could remain unprotected by the spendthrift clause.
South Dakota has uniquely addressed these potential issues by enacting a discretionary support
statute, which is a codification of the Restatement (Second) and the common law. 248
14. MISCELLANEOUS
Many of the DAPT statutes also have a provision stating that the court of the DAPT state has
exclusive jurisdiction over DAPT actions, for instance Alaska, 249 Delaware, 250 Nevada, 251 and
South Dakota. 252 Additionally, if an action is not brought within South Dakota, South Dakota
provides for the automatic removal of a non-South Dakota trustee, if the foreign court does not
follow South Dakota’s laws. 253 A successor trustee will then be appointed under the South Dakota
statute. Further, some DAPT statutes protect advisors who create the DAPT, such as Delaware, 254
Nevada, 255 and South Dakota. 256 These laws coupled with those previously discussed all create
major hurdles for creditors.
247 See SOUTH DAKOTA CODIFIED LAWS § 55-1-43.
248 See SOUTH DAKOTA CODIFIED LAWS § 55-1-43.
249 ALASKA STAT. § 34.40.110.
250 DEL. CODE ANN. tit. 12, § 3572.
251 NEV. REV. STAT. § 166.120.
252 SOUTH DAKOTA CODIFIED LAWS § 55-16-13.
253 SOUTH DAKOTA CODIFIED LAWS § 55-3-47.
254 DEL. CODE ANN. tit. 12, § 3572.
255 NEV. REV. STAT. § 166.170.
SOUTH DAKOTA CODIFIED LAWS § 55-16-12.
© South Dakota Trust Company LLC – All Rights Reserved
Page | 40