A State Senate committee is passing an annual bill crafted by those it impacts.
Senate Bill 65 is a bill that supporters say keeps South Dakota on the cutting edge of the trust industry with ongoing updates to language.
The state harbors about $305 billion in assets. About 450 people work in the trust industry for about 100 different companies.
Senate Bill 65 is a bill that annually comes out of the South Dakota Task Force on Trust Administration Review and Reform. It’s comprised of members from Dorsey & Whitney Trust Company, South Dakota Trust Company, First PREMIER Bank, Citicorp Trust, American Bank & Trust… and more.
It’s meant to keep the state regulations in good standing with the industry.
Pat Goetzinger has sat on the task force since its inception in 1997 by then-Governor Bill Janklow. He says provisions in this annual bill are put there so people take advantage of the state’s tax code.
“It’s all part of the tax planning that any taxpayer is allowed to undertake with regard to their estate and their business succession planning ideas,” Goetzinger says. “That’s what we’re accomplishing by allowing them to take advantage of South Dakota trusts.”
Critics of the legislation and the trust industry say this bill and state statute allows wealthy people to avoid or minimize the taxes they pay to the United States.
Democratic State Senator Susan Wismer says South Dakota broke the social contract on the rule against perpetuities. That’s a common law that prevents people from controlling private property long after that person is dead.
“Just think, if these assets were taxed in a way they normally would be, in the state where they came from, those assets would be—they would flow through the economy much more efficiently than they do. Because South Dakota allows itself to be used as a haven for trust money that spans generations,” Wismer says.
Wismer says the annual tweaks to trust statute are complex and could have unintended consequences.