Insurance: Irrevocable Life Insurance Trusts (ILITs) and LLCs:

SDTC provides trust and LLC administration services for fixed, variable, and private placement life insurance policies. SDTC serves as trustee of numerous insurance trusts because of its its low premium tax, great trust, insurance, asset protection and lending laws.

Newly drafted Insurance Trusts in South Dakota are generally "directed" trusts. SDTC acts as Administrative Trustee and takes direction from a trust advisor, an Investment Committee, and a Distribution Committee made up of family members and their advisors. The Distribution Committee directs the Administrative Trustee to make trust distributions and the trust advisor or Investment Committee directs the Administrative Trustee on how to invest the trust (i.e., purchase one or more insurance policies etc…).

If an existing ILIT in another state changes situs to South Dakota, it will likely be "delegated" rather than "directed" and is typically reformed to a "directed" trust either judicially or non-judicially, before insurance is purchased.

The low South Dakota premium tax would generally apply whether or not an irrevocable trust, revocable trust with a separate tax ID number or LLC is created. If there are trusts in another state and someone wants to take advantage of the lower South Dakota Premium tax, generally, a South Dakota LLC is established with SDTC as co-managing member to purchase insurance within the SD LLC and allocate the units to the non-South Dakota trusts.

SDTC recognizes that most advisors and corporate trustees do not want to act as trustee of an Irrevocable Life Insurance Trust (ILIT) until the proceeds are actually paid, leaving the family to cope with the burdens of the unfunded insurance trust's administration. SDTC will act as trustee during the insured's lifetime and after the insured's death. SDTC provides ILIT administration services for fixed, variable, and private-placement policies.

There are two levels of trust administration associated with ILITS: the first provides for the insured's lifetime and the second begins with the insured's death.

Administrative Duties during Insured's Lifetime:

The Investment Committee directs SDTC regarding these duties for a “directed” trust:

• Creation of trust account
• Transfer of policies into the trust
• Purchase of new policies
• Tax reporting
• Preparation and transmittal of beneficiary Crummey notices
• Extensive monitoring of insurance companies and policies

In response to evolving case law and litigation regarding trustee responsibilities with non-directed trusts, SDTC can review an insurance company's financial stability as follows:

• Use of rating services like Moody's, Standard & Poor's, Duff & Phelps, and Weiss
• Independent analysis of each company's dividend history, expense ratio and portfolio (i.e., asset allocation, asset and bond quality, non-performing assets)
• Periodic review of policy appropriateness for trust objectives
• Enforce ledger update
• Provide services to review the status of individual policies via in-force ledger updates, etc.

Administrative Duties after Insured's Death:

• Collection of proceeds
• Distribution and/or continued administration of trust assets

“Full all-inclusive", "directed" and "delegated" trust administration services are available through SDTC.