How to Create a Living Trust in South Dakota

A living trust can be a powerful tool for building a comprehensive estate plan and ensuring your assets are managed and distributed according to your wishes. Since estate and inheritance laws vary by state, it’s important to understand the specific rules that apply in South Dakota. This is how to create a living trust in the Mount Rushmore State and key considerations for deciding whether one fits your needs.

For help navigating your estate planning options, consider working with a financial advisor.

What Is a Living Trust?

A living trust is a legal arrangement that lets you transfer control of your estate to a trustee. This party then distributes your property to any beneficiaries you have named. The trust goes into effect as soon as you create it, giving you the authority to decide at what age or date your beneficiaries will receive your assets.

There are also two types of living trusts: revocable living trusts and irrevocable living trusts.

• Revocable trusts allow the trust creator, or grantor, to modify or revoke the provisions in the trust without the approval of the trust’s beneficiaries.
• Irrevocable trusts cannot be altered or terminated by the grantor unless all of the beneficiaries approve.

How to Create a Living Trust in South Dakota

Forming a living trust in the Mount Rushmore State involves several steps.

1. Choose the trust that best suits your financial situation. You will use an individual trust if you’re single, but consider a joint trust if you’re married. In a joint trust, each spouse can include both separate and shared property. Married couples can also use two individual trusts.
2. Take inventory of your property. This will help you determine exactly what you want the contents of your trust to be.
   • Real estate
   • Stocks
   • Retirement accounts
   • Bank accounts
   • Heirlooms
3. Choose a trustee to manage your trust. If you decide to act as the trustee, you’ll have to select a successor trustee to manage your estate after your incapacitation or death.
4. Create the trust document. You can use an online program to do this, or you can hire an estate planning attorney.
5. Get the trust document notarized. You must sign the trust in front of a notary public.
6. Transfer property into the trust to fund it. This requires paperwork, but it ensures that your trustee can successfully distribute your assets to the beneficiaries you’ve chosen.

A financial advisor can help you determine if a living trust could be helpful in your situation.

How Much Does It Cost to Create a Living Trust in South Dakota?

There are a few options for creating a living trust in South Dakota.

The method you choose will affect how much you spend. If you prefer to create the trust yourself, you’ll spend up to a few hundred dollars, but DIY estate planning also presents some risks.

The other option is to hire an attorney who specializes in living trusts. This method is more expensive, as you may spend $1,000 or more, depending on your attorney’s fees. This could be the safer route if you’re not comfortable with creating the trust document on your own.

Living Trusts vs. Wills

Even if you’ve already formed a living trust, you can still benefit from incorporating a will into your estate plan.

If there are any assets you didn’t include in your trust, you can assign them to a will. This gives you more flexibility with distributing your assets after death. Wills also allow you to perform actions that trusts cannot.

These include:

• Naming an executor
• Establishing guardianship for minors
• Leaving instructions for taxes and debt
• Choosing managers for children’s property

The following chart highlights some similarities and differences between a living trust and a will.

Living Trusts vs. Wills

Living Trusts and Taxes in South Dakota

Taxes generally won’t affect your living trust, but you should still take note of South Dakota’s estate tax and inheritance laws.

Thankfully, South Dakota doesn’t have an inheritance tax or estate tax. However, for 2026, the federal estate tax applies to estates worth more than $15 million for individuals ¹ .

If your estate comes in smaller than the amounts above, it won’t owe anything to the federal government. Should your estate exceed the federal threshold, however, you’ll have to pay estate taxes even if you don’t use a living trust.

Why Consider a Living Trust in South Dakota

Creating a living trust can offer several advantages for managing your estate.

One of the primary benefits is avoiding probate. This is the legal process through which a court validates a will and oversees the distribution of assets.

Probate can be time-consuming and costly in many states, but South Dakota has adopted the Uniform Probate Code, which significantly streamlines the process. Additionally, if your estate is valued under $50,000, the state offers an even simpler probate procedure that may make a living trust unnecessary for smaller estates.

However, South Dakota law also includes a right of election for surviving spouses. This means that even if your spouse is not a beneficiary, they may legally be able to claim a portion of your estate. Specifically, a surviving spouse has either nine months from the date of death or four months from the start of probate to claim their elective share.

This provision could override certain aspects of your trust unless your estate plan accounts for it.

Who Might Benefit From a Living Trust in South Dakota?

South Dakota’s streamlined probate process reduces the urgency for some residents to create a living trust. However, there are still compelling reasons to consider one.

If you have a moderately-sized or complex estate, or if you wish to maintain privacy by avoiding probate court altogether, a living trust may be worth the added cost and effort. It’s also useful for those who want more control over the distribution of their assets, particularly in cases involving minor children or beneficiaries with special needs.

That said, individuals with very simple estates, especially those worth less than $50,000, may find South Dakota’s simplified probate process more than sufficient. As always, it’s a good idea to consult with a financial advisor or estate planning attorney to weigh your options and determine what’s best for your specific situation.

Why South Dakota Is Popular for Out-of-State Trusts

South Dakota does not get much attention as a financial hub, but for trusts, it has become one of the most sought-after jurisdictions in the country. Wealthy families, estate planners and trust attorneys across the U.S. regularly set up trusts in South Dakota even when the grantor and all beneficiaries live elsewhere.

The reasons come down to a combination of tax advantages, legal protections and flexibility that few other states can match.

Tax Benefits

The tax picture is a big part of the appeal, as South Dakota has none of the following taxes.

• State income tax
• Capital gains tax
• State estate tax
• Inheritance tax

For trusts holding appreciated investments, real estate or business interests generating ongoing income, the difference between South Dakota and a high-tax state like California or New York can add up to substantial savings over time. The trust itself, not just the grantor, benefits from this treatment as long as it meets the requirements for a South Dakota trust.

Dynasty Trusts

South Dakota also allows dynasty trusts. Most states place a time limit on how long a trust can exist, often based on a legal concept called the rule against perpetuities.

South Dakota abolished that rule, which means a trust established there can continue indefinitely. This allows families to pass wealth across multiple generations within a single trust structure without having to terminate and distribute everything at once.

Asset Protection

Asset protection is another draw. South Dakota has some of the strongest domestic asset protection trust laws in the country. If a trust is properly structured, its assets can be protected from future creditors after a relatively short waiting period.

This does not protect against debts or obligations from before the trust was funded. However, for people looking to protect wealth from potential future claims, it offers a level of security that most states do not.

Privacy

Privacy is another benefit. South Dakota does not require trusts to be registered with the state or disclosed in any public filing. Combined with the fact that assets held in a living trust avoid probate and the public record that comes with it, this gives grantors and beneficiaries a degree of confidentiality that is difficult to achieve in many other states.

For families who value keeping their financial affairs out of public view, this is a meaningful benefit.

Out-of-State

Setting all of this up does not require living in South Dakota or even visiting. An out-of-state resident can establish a South Dakota trust by appointing a South Dakota-based trustee. This can be either an individual who lives there or a corporate trust company that operates in the state. The grantor, beneficiaries and assets can all be located elsewhere.

This accessibility is a major reason the state has attracted hundreds of billions of dollars in trust assets from across the country over the past two decades.

Bottom Line

South Dakota uses the Uniform Probate Code, so it may be better to use the probate process instead of a living trust. If you prefer a living trust, an attorney can help you create the document, although hiring an attorney will cost more than doing it yourself. No matter which route you take for estate planning, remember that South Dakota grants a surviving spouse the right of election. Whether you decide to use a living trust or a will, your spouse will inherit a percentage of your assets following your death.

Estate Planning Tips

• Creating an estate plan doesn’t have to be difficult. A financial advisor can help you establish a strategy to meet your goals. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.
• Budgeting is one way to preserve your property and assets throughout your life and after death. This can help you save money, while taking care of any regular expenses you have. If you’re not sure where to begin, consider using our budget calculator.

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