Private Family Trust Companies (PFTC)South Dakota is continually chosen as the top lightly regulated Private Family Trust Company jurisdiction in the U.S. Most wealthy families name family members as trustees in their estate plans, many not realizing the personal liability that they are taking on- along with the fact that they are not benefiting from South Dakota trust situs.
As a result of the low capital requirements (the lowest in the U.S.), low set-up and maintenance costs, and the compelling advantages; many families are now establishing their own South Dakota Private Family Trust Company.
A South Dakota Private Family Trust Company is a South Dakota LLC or corporate entity that is typically 100% owned by the family and qualifies to do business in South Dakota as a Private Family Trust Company after a hearing and acceptance by the South Dakota Division of Banking. The South Dakota PFTC then works with the non-South Dakota Family office via service agreements to provide trust administration and other related services to the family trust.
As owners of the PFTC LLC, the family can acquire Directors and Officers as well as Errors and Omission Insurance and serve as trustee within an LLC wrapper rather than individually, thus eliminating personal liability they have as a result of being named co-trustee in a family member's trust document.
The PFTC can then lease investment, asset allocation, and other services from the non-South Dakota family office. Many families also place their PFTC in a South Dakota Dynasty Trust with an unlimited duration to perpetuate its existence. South Dakota has a "special purpose" statute that allows for the PFTC to be placed into a South Dakota Dynasty Trust. South Dakota’s unlimited duration dynasty statute in the U.S. dates back to 1983. The statute follows the Murphy Case, which the IRS acquiesced in 1979. South Dakota is one of the few states that can make these claims.
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