When it comes to managing wealth, protecting assets, or planning for the future, trusts are one of the most versatile tools available. But did you know that where you set up your trust can significantly impact its privacy and protections? Some states in the U.S. have gone to great lengths to create laws that not only safeguard your assets but also keep your financial matters out of the public eye. It’s a fascinating—and sometimes controversial—topic, especially in an age where transparency and accountability are buzzwords.
Let’s talk about South Dakota. This state has quietly become the go-to destination for those seeking maximum confidentiality in their financial dealings. South Dakota’s trust laws allow for something called “permanent sealing” of trust documents. According to the South Dakota Trust Task Force, no one outside the trust’s beneficiaries and administrators can access its details—not now, not ever. This isn’t just about privacy for billionaires or celebrities; it’s also an appealing option for families who want to protect their financial information from public scrutiny.
Take, for example, a family that owns a successful multi-generational business. Let’s call them the Thompsons. When the patriarch, Richard, decided to set up a trust to manage the company’s succession plan, he wanted to ensure that the business's finances and future operations remained private. After consulting with his advisors, he chose South Dakota for its airtight privacy laws. The Thompsons’ trust details—how the business is divided among heirs, what contingencies exist, and how profits are distributed—are permanently sealed. No nosy neighbors, journalists, or competitors can pry into their family’s affairs.
But South Dakota isn’t the only player in this space. States like Nevada, Delaware, and Wyoming also offer attractive trust options, each with its own pros and cons.
Nevada, for example, is known for its strong asset protection laws. It offers short “look-back” periods for trust asset transfers—just two years—which can shield your assets from creditors quickly. According to Nevada Revised Statutes, the state also has no income tax, making it appealing for wealthier families. However, its privacy protections are slightly weaker compared to South Dakota; trust documents can be unsealed at a judge’s discretion, which might concern those prioritizing long-term confidentiality.
Delaware is another popular choice, often praised for its flexible trust laws and tax-friendly policies. According to the Delaware Bankers Association, the state allows for the creation of perpetual trusts, meaning they can last indefinitely—ideal for families looking to preserve wealth across generations. It’s also a hub for corporate trust services, so finding experienced professionals is relatively easy. On the downside, while Delaware offers some privacy protections, trust documents can also be subject to judicial review and unsealed in certain situations.
Wyoming combines strong privacy and asset protection features with a business-friendly environment. The state has no income tax, allows for perpetual trusts, and provides protections against creditors. While Wyoming’s privacy laws aren’t as robust as South Dakota’s, they are still better than many other states, making it a solid middle-ground choice.
Now, you might be wondering: Does establishing a trust outside my state of domicile or where my assets are located have an impact? The answer is yes, and it’s something you need to carefully consider. Many states, including those with favorable trust laws, allow non-residents to set up trusts within their jurisdiction. However, it’s essential to evaluate whether your home state will respect the laws of the trust’s jurisdiction. For instance, some states have “clawback” provisions that attempt to apply their own rules to assets transferred to out-of-state trusts. Additionally, you may need to appoint a trustee who is a resident of the trust’s chosen state to ensure compliance.
While setting up a trust in a state with strong protections can provide significant benefits, it’s not always a seamless process. You’ll need expert legal and financial advice to navigate these complexities, particularly if your assets are spread across multiple states or countries.
The decision of where to establish a trust ultimately depends on your priorities. South Dakota offers unmatched privacy, according to the South Dakota Division of Banking. Nevada excels in asset protection and tax benefits, per the Nevada Trust Company. Delaware provides flexibility and a deep pool of expertise, as highlighted by the Delaware Financial Education Alliance. Wyoming strikes a balance between privacy and cost-effectiveness, supported by the Wyoming Trust Association.
But make no mistake: setting up a trust isn’t a casual decision. It requires careful planning, expert advice, and a clear understanding of your goals. Working with experienced attorneys and financial advisors is essential to ensure your trust meets your needs and complies with all applicable laws.
The world of trust laws may seem like a secretive corner of the financial world, but it’s a vital tool for anyone looking to protect their assets and plan for the future. Whether you’re a business owner like Richard Thompson or simply someone who wants to secure your family’s financial legacy, choosing the right state for your trust could make all the difference.
Because at the end of the day, it’s not just about keeping secrets—it’s about building security and peace of mind for the people you care about most.
Sources:
https://blakeharrislaw.com/blog/best-asset-protection-states
https://www.kiplinger.com/retirement/best-states-for-trusts-how-to-choose-one-thats-trust-worthy
https://wyomingllcattorney.com/Blog/Best-States-for-Asset-Protection-Trusts
https://www.lambergg.com/insights/best-states-for-trusts
https://commonwealth-trust.com/
Evan R. Guido is the Founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or eguido@aksalawealth.com. Read more of his insights at https://finance.heraldtribune.com/category/ask-guido/. Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through an Avantax affiliated insurance agency. 6260 Lake Osprey Dr. Lakewood Ranch, FL 34240. The views and opinions presented in this article are those of Evan R. Guido and not of Avantax Wealth Management® or its subsidiaries. These opinions are based on Evan R. Guido observations and research and are not intended to predict or depict performance of any investment. These views are as of the close of business on 3/12/2025 and are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities. Past performance does not guarantee future results. The S&P 500 is an index of 500 major, large-cap U.S. corporations. Standard & Poor's is a corporation that rates stocks and corporate and municipal bonds according to risk profiles. You cannot invest directly in an index. An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. CDs are FDIC insured and offer a fixed rate of return. They do not necessarily protect against a rising cost of living. The FDIC insurance on CDs applies in case of insolvency of the bank, but does not protect market value. Other investments are not insured, and their principal and yield may fluctuate with market conditions. Investments are subject to market risks including the potential loss of principal invested. Neither diversification nor asset allocation assure or guarantee better performance and cannot eliminate the risk of investment losses. This information is intended to be educational and does not reflect any particular investment or investment needs of any specific investor. Aksala Wealth Advisors, LLC is not a registered broker/dealer or Registered Investment Advisory firm. Aksala Wealth Advisors, LLC and Avantax are not affiliated.