Purpose Trusts without Beneficiaries to Preserve a Treasured Asset. South Dakota has the top-rated and broadest dynasty purpose trust statutes in the U.S.
Generally, a Purpose Trust is a trust that is created for a purpose (something) rather than for beneficiaries (someone). Trusts generally have beneficiaries for whom the trust is established, for instance for individual family members or a charity. With a purpose trust, a trust enforcer is generally appointed to make sure the purpose is enforced. Additionally, the purpose trust also has a trust protector and an administrative directed trustee. The trust protector and enforcer can generally be the same person or committee. Once the purpose has ended, a purpose trust can convert to a beneficiary trust if desired and/or be distributed to family, friends and/or charity.
Broad purpose trust statutes, like South Dakota’s, are only available in a few states. Although all states allow for pet trusts (a form of purpose trust to care for a pet) which are more limited in scope. Some states also allow for honorary trusts (trusts with the limited purpose to care for a gravesite). South Dakota is one of a very few states that allows for purpose trusts to be established for any lawful purpose, not just for the pets or honoraries.
Furthermore, South Dakota is unique in that it allows for a perpetual purpose trust (i.e., the purpose trust has no restriction as to length of time it can be in existence) with a specific unlimited duration Murphy case dynasty trust statute. Consequently, a South Dakota purpose trust can last in perpetuity if desired. This means that the grantor’s intent to care for an asset and/or provide trust funds for the specific purpose can be carried out for as a long as desired. This is often an important consideration in establishing a purpose trust in South Dakota.
Some of the common reasons for establishing a Purpose Trust in South Dakota are:
- Pet care (including offspring)
- Maintenance of grave sites (honorary trusts); also, support of religious gravesite ceremonies
- Maintenance of family property (for example, antiques, cars, jewelry and memorabilia)
- Maintenance of an art collection
- Maintenance of family homes (residence and vacation)
- Long-term maintenance of building, property or land
- Maintenance of business interests
- Digital asset protection
- To provide for a philanthropic purpose not qualifying for a charitable deduction
- Maintenance of private family trust companies
- Maintenance of Special Purpose Entities/ Trust Protector Companies
*Please see: “Trusts without Beneficiaries – What is the Purpose?” Trusts & Estates magazine, Feb. 2015