Irrevocable Trust Agreement
comments and customize as needed
4. Remove all guidance comments before final execution
5. Have this document reviewed by qualified South Dakota trust counsel before execution
6. Confirm all tax elections with independent tax counsel before funding
7. If establishing a Qualified Spendthrift Trust (DAPT), the Settlor Affidavit in Schedule D is MANDATORY
JURISDICTION: South Dakota
LAST UPDATED: 2026-02-16
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SOUTH DAKOTA IRREVOCABLE TRUST AGREEMENT
(SDCL Title 55 — South Dakota Trust Law)
TABLE OF CONTENTS
Article 1 — Trust Identification, Situs, and Parties
Article 2 — South Dakota Situs Declaration and Advantages
Article 3 — Irrevocability and Retained Powers
Article 4 — Trust Purpose and Type Election
Article 5 — Qualified Spendthrift Trust / DAPT Provisions (SDCL § 55-16)
Article 6 — Perpetual Dynasty Trust Provisions (SDCL § 43-5-8)
Article 7 — Crummey Withdrawal Powers
Article 8 — Generation-Skipping Transfer (GST) Tax Provisions
Article 9 — Irrevocable Life Insurance Trust (ILIT) Provisions
Article 10 — Intentionally Defective Grantor Trust (IDGT) Provisions
Article 11 — Beneficial Interests and Distributions
Article 12 — Spendthrift Provisions
Article 13 — Directed Trust Provisions (SDCL § 55-1B)
Article 14 — Trust Protector (SDCL § 55-1B-5)
Article 15 — Decanting (SDCL §§ 55-2-13 to 55-2-21)
Article 16 — Digital Assets
Article 17 — Trustee Provisions
Article 18 — No-Contest Clause
Article 19 — Tax Provisions
Article 20 — General Provisions
Article 21 — Execution
Schedule A — Initial Trust Property
Schedule B — Beneficiary Designations and Crummey Rights
Schedule C — Distribution Provisions
Schedule D — Settlor Affidavit (Qualified Spendthrift Trust)
Schedule E — Certification of Trust
ARTICLE 1 — TRUST IDENTIFICATION, SITUS, AND PARTIES
1.1 Trust Name. This trust shall be known as the [________________________________] Irrevocable Trust (the "Trust").
1.2 Effective Date. This Trust Agreement (the "Agreement") is effective as of [__/__/____] (the "Effective Date").
1.3 Settlor. The Settlor of this Trust is:
| Field | Information |
|---|---|
| Full Legal Name | [________________________________] |
| Date of Birth | [__/__/____] |
| SSN (last four) | XXX-XX-[____] |
| Street Address | [________________________________] |
| City, State, ZIP | [________________________________] |
| State of Domicile | [________________________________] |
1.4 Initial Trustee. The initial Trustee of this Trust is:
| Field | Information |
|---|---|
| Full Legal Name / Entity Name | [________________________________] |
| Type | ☐ Individual ☐ South Dakota Trust Company ☐ Private Trust Company ☐ National Bank |
| Street Address | [________________________________] |
| City, State, ZIP | [________________________________] |
| SD Charter / Registration No. | [________________________________] |
1.5 Trust Situs. The situs of this Trust is the State of South Dakota. The Trust shall be administered in South Dakota, and at least some trust assets shall be held or deposited in South Dakota.
ARTICLE 2 — SOUTH DAKOTA SITUS DECLARATION AND ADVANTAGES
2.1 Governing Law. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed in accordance with the laws of the State of South Dakota, without regard to conflict-of-laws principles.
2.2 Situs Advantages. The Settlor has intentionally selected South Dakota as the situs of this Trust for the following reasons, among others:
(a) No State Income Tax. South Dakota's Constitution prohibits a state income tax. Trust income, capital gains, dividends, and interest earned within this Trust are not subject to South Dakota state taxation;
(b) Perpetual Duration. South Dakota has abolished the Rule Against Perpetuities (SDCL § 43-5-8). This Trust may continue in perpetuity without a mandatory termination date;
(c) Asset Protection. South Dakota's Qualified Dispositions in Trust Act (SDCL §§ 55-16-1 to 55-16-17) permits self-settled asset protection trusts with a 2-year statute of limitations for fraudulent transfer claims — the shortest in the nation;
(d) Directed Trusts. South Dakota's directed trust statute (SDCL §§ 55-1B-1 to 55-1B-8) is the most comprehensive in the nation, allowing separation of investment, distribution, tax, and administrative functions with explicit liability protection for directed trustees;
(e) Privacy. South Dakota does not require trust registration with the state. Trust documents are not publicly available, and trust-related judicial proceedings are automatically sealed;
(f) Trust Protector. South Dakota provides statutory authority for trust protectors with enumerated powers and liability protections (SDCL § 55-1B-5);
(g) Decanting. South Dakota permits broad trustee decanting authority (SDCL §§ 55-2-13 to 55-2-21, expanded by SB 69 in 2025);
(h) Private Trust Companies. South Dakota's Private Trust Company Act (SDCL §§ 51A-6A-1 to 51A-6A-63) allows families to establish private trust companies for multi-generational trust administration; and
(i) No Reciprocal Tax. South Dakota does not impose a "throwback" tax on accumulated trust income distributed to beneficiaries.
2.3 Change of Situs. The Trust Protector (if appointed) or, if no Trust Protector is serving, the Trustee may change the situs of this Trust to another jurisdiction if such change is in the best interests of the beneficiaries, provided that such change does not impair the asset protection or tax advantages of this Trust.
ARTICLE 3 — IRREVOCABILITY AND RETAINED POWERS
3.1 Irrevocability. This Trust is irrevocable. The Settlor expressly and permanently waives all rights to revoke, amend, alter, or terminate this Trust, except as expressly permitted in Section 3.2. The Settlor acknowledges that this waiver is a material term of this Agreement and that the asset protection, tax, and estate planning benefits of this Trust depend upon its irrevocable character.
3.2 Limited Administrative Amendments. Notwithstanding Section 3.1, the Trustee, with the written consent of the Trust Protector (if appointed), may amend this Agreement solely for the following purposes:
(a) To correct scrivener's errors or ambiguities;
(b) To conform the Agreement to mandatory changes in applicable law;
(c) To facilitate tax compliance or optimize tax treatment, provided no such amendment materially alters any beneficiary's beneficial interest; or
(d) To change the situs of the Trust as permitted under Section 2.3.
3.3 Retained Powers — Estate Tax Exclusion. Any power retained by the Settlor under this Agreement (including, without limitation, the swap power under Article 10 and the power to substitute assets of equivalent value) shall not be construed as a power to revoke the Trust or as an incident of ownership that would cause inclusion of Trust assets in the Settlor's gross estate under IRC §§ 2036, 2037, 2038, or 2042, except as expressly intended under Article 10 (Grantor Trust Provisions).
3.4 No Beneficial Interest (Default). Unless the Settlor has elected Qualified Spendthrift Trust (DAPT) status under Article 5, the Settlor retains no beneficial interest in the Trust Estate and is not a permissible beneficiary.
ARTICLE 4 — TRUST PURPOSE AND TYPE ELECTION
4.1 Trust Purpose. The purpose of this Trust is to hold, invest, protect, and distribute the Trust Estate for the benefit of the Beneficiaries designated herein, in a tax-efficient manner, and to accomplish the specific objectives indicated by the trust type election(s) below.
4.2 Trust Type Election. The Settlor elects the following trust type(s) (check all that apply):
☐ Qualified Spendthrift Trust (DAPT) — Self-settled asset protection trust under SDCL §§ 55-16-1 to 55-16-17. Settlor may be a discretionary beneficiary while shielding assets from creditors. Complete Article 5 and Schedule D (Settlor Affidavit).
☐ Dynasty Trust — Perpetual trust designed to benefit multiple generations while avoiding estate, gift, and GST tax at each generational transfer. Enabled by SDCL § 43-5-8 (RAP abolished). Complete Article 6.
☐ Irrevocable Life Insurance Trust (ILIT) — Trust designed to own life insurance policies outside the Settlor's estate to avoid estate tax inclusion under IRC § 2042. Complete Article 9.
☐ Intentionally Defective Grantor Trust (IDGT) — Trust that is irrevocable for estate/gift tax purposes but treated as a grantor trust for income tax purposes, allowing the Settlor to pay income taxes on trust earnings (effectively a tax-free gift to the trust). Complete Article 10.
☐ Standard Irrevocable Trust — Irrevocable trust without DAPT, dynasty, ILIT, or IDGT features.
☐ Combination — This Trust incorporates features of multiple trust types as indicated above.
ARTICLE 5 — QUALIFIED SPENDTHRIFT TRUST (DAPT) PROVISIONS
(SDCL §§ 55-16-1 to 55-16-17)
☐ This Article applies — Qualified Spendthrift Trust elected
☐ This Article does not apply — skip to Article 6
5.1 Qualified Disposition Declaration. The Settlor declares that the transfer of assets to this Trust constitutes a "qualified disposition" as defined in SDCL § 55-16-2, and that this Trust satisfies all requirements for a qualified spendthrift trust under SDCL §§ 55-16-1 to 55-16-17.
5.2 Required Elements. This Trust instrument:
(a) Expressly incorporates the laws of the State of South Dakota to govern the validity, construction, and administration of the Trust (see Section 2.1);
(b) Is irrevocable (see Section 3.1); and
(c) Contains a spendthrift provision restraining both voluntary and involuntary transfer of the Settlor's beneficial interest (see Article 12).
5.3 Qualified Trustee Requirement. At all times while this Trust is a qualified spendthrift trust, at least one Trustee must be a "qualified trustee" as defined in SDCL § 55-16-5, meaning:
(a) An individual who is a resident of South Dakota (other than the Settlor); or
(b) A trust company or bank with trust powers that:
- Is organized under the laws of South Dakota or authorized to conduct trust business in South Dakota;
- Maintains an office in South Dakota; and
- Maintains or arranges for custody of some or all of the Trust property in South Dakota, maintains records for the Trust on an exclusive or nonexclusive basis in South Dakota, prepares or arranges for the preparation of fiduciary income tax returns for the Trust, or otherwise materially participates in the administration of the Trust.
5.4 Settlor as Discretionary Beneficiary. The Settlor may be a discretionary beneficiary of this Trust, entitled to receive distributions of income and/or principal in the sole and absolute discretion of the Trustee, subject to the following limitations:
(a) The Settlor shall NOT serve as sole Trustee;
(b) The Settlor shall NOT have the power to direct distributions to himself or herself;
(c) All distribution decisions regarding the Settlor shall be made by an independent Trustee or distribution advisor acting in a fiduciary capacity; and
(d) Distributions to the Settlor shall be subject to the spendthrift provisions of Article 12.
5.5 Settlor Affidavit. Contemporaneously with the execution of this Agreement, the Settlor shall execute the Affidavit attached as Schedule D, affirming under oath as required by SDCL § 55-16-15 that:
(a) The Settlor has full authority to transfer the property to the Trust;
(b) The property was not obtained through unlawful activity;
(c) The transfer will not render the Settlor insolvent;
(d) The Settlor does not intend to defraud any creditor by making the transfer;
(e) There is no pending or threatened litigation against the Settlor (other than as disclosed in the Affidavit);
(f) The Settlor is not involved in any pending or threatened administrative proceeding;
(g) The Settlor is not in default of any child support obligation;
(h) The Settlor does not contemplate filing for bankruptcy; and
(i) The Settlor has liability insurance coverage of at least $1,000,000 or coverage in an amount equal to the fair market value of the assets transferred to the Trust, whichever is greater.
5.6 Creditor Protection — Fraudulent Transfer Standard. A creditor of the Settlor may not attach, seize, or otherwise reach the Trust property unless the creditor proves, by clear and convincing evidence, that the transfer to the Trust was a fraudulent transfer under SDCL § 55-16-9.
5.7 Statute of Limitations. A creditor's cause of action with respect to a fraudulent transfer to this Trust is extinguished unless brought within the later of:
(a) Two (2) years after the qualified disposition was made; or
(b) Six (6) months after the creditor discovered or reasonably should have discovered the qualified disposition;
but in no event more than two (2) years after the qualified disposition. (SDCL § 55-16-10.)
5.8 Exception Creditors. Notwithstanding the foregoing, the spendthrift and asset protection provisions of this Trust shall not apply to the following exception creditors to the extent required by law:
(a) Claims for child support or alimony;
(b) Tort claims that arose before the qualified disposition was made; and
(c) Claims by the State of South Dakota or the United States.
5.9 Supplemental Affidavits. For each subsequent transfer of property to this Trust, the Settlor shall execute a supplemental affidavit substantially in the form of Schedule D, updated to reflect the circumstances at the time of the additional transfer.
ARTICLE 6 — PERPETUAL DYNASTY TRUST PROVISIONS
(SDCL § 43-5-8)
☐ This Article applies — Dynasty Trust elected
☐ This Article does not apply — skip to Article 7
6.1 Perpetual Duration. Pursuant to SDCL § 43-5-8, the common-law Rule Against Perpetuities is not in force in the State of South Dakota. This Trust shall have no mandatory termination date and shall continue in perpetuity until terminated in accordance with Section 6.3.
6.2 Generation-Spanning Intent. The Settlor intends this Trust to benefit multiple generations of the Settlor's descendants and to preserve the Trust Estate from federal estate, gift, and generation-skipping transfer tax at each generational transfer for as long as the Trust continues.
6.3 Termination Events. This Trust shall terminate upon the earliest of:
(a) The written direction of the Trust Protector (if appointed) to terminate the Trust, after consultation with tax counsel;
(b) The exhaustion of all Trust assets;
(c) A court order requiring termination; or
(d) The date on which no beneficiary or potential beneficiary exists and no successor beneficiary can be identified under the terms of this Agreement.
6.4 Perpetuities Savings Clause. Notwithstanding Section 6.1, if any provision of this Trust is determined by a court of competent jurisdiction to violate the rule against perpetuities or any similar rule of any applicable jurisdiction, such provision shall be reformed to comply with such rule to the maximum extent possible while preserving the Settlor's intent.
6.5 GST Coordination. The dynasty trust provisions of this Article are intended to coordinate with the GST tax provisions of Article 8 to ensure that Trust assets allocated to the GST-exempt portion of the Trust are never subject to GST tax, regardless of the number of generational transfers.
ARTICLE 7 — CRUMMEY WITHDRAWAL POWERS
(IRC § 2503(b); IRC § 2514)
7.1 Withdrawal Right. Each beneficiary who is designated as a "Crummey Beneficiary" in Schedule B shall have the right, for a period of thirty (30) days following each contribution to the Trust, to withdraw from the Trust an amount equal to the lesser of:
(a) The value of such contribution; or
(b) The annual gift tax exclusion amount under IRC § 2503(b) (currently $19,000 per donee for 2026) divided by the number of Crummey Beneficiaries.
7.2 Notice of Contribution. The Trustee shall provide written notice to each Crummey Beneficiary (or the beneficiary's legal guardian if the beneficiary is a minor) within five (5) days of each contribution, stating:
(a) The date and amount of the contribution;
(b) The beneficiary's right to withdraw;
(c) The deadline for exercising the withdrawal right; and
(d) The procedure for making a withdrawal.
7.3 Lapse of Withdrawal Right. If a Crummey Beneficiary does not exercise the withdrawal right within the 30-day period, the right shall lapse, subject to the limitations of Sections 7.4 and 7.5.
7.4 Five-and-Five Limitation. In any calendar year, a beneficiary's withdrawal right shall lapse only to the extent of the greater of:
(a) Five Thousand Dollars ($5,000); or
(b) Five percent (5%) of the aggregate value of the Trust assets from which the withdrawal could have been satisfied, valued as of the date of lapse.
(IRC § 2514(e); IRC § 2041(b)(2).)
7.5 Hanging Power. To the extent that the lapse of a beneficiary's withdrawal right in any calendar year would exceed the five-and-five limitation in Section 7.4, the excess withdrawal right shall NOT lapse but shall be carried forward and shall lapse in the earliest subsequent calendar year(s) in which the lapse would not exceed the five-and-five limitation. This "hanging power" prevents the lapse from being treated as a taxable gift by the beneficiary.
ARTICLE 8 — GENERATION-SKIPPING TRANSFER (GST) TAX PROVISIONS
(IRC § 2601 et seq.)
8.1 GST Exemption Allocation. The Settlor intends that the Settlor's available GST exemption (currently $15,000,000 per individual for 2026, as made permanent by the One Big Beautiful Bill Act signed July 4, 2025) be allocated to this Trust as follows:
☐ Allocate the Settlor's entire available GST exemption to this Trust
☐ Allocate $[________________________________] of the Settlor's GST exemption to this Trust
☐ Do not allocate GST exemption to this Trust at this time — Settlor will make allocation on gift tax return (IRS Form 709)
8.2 GST-Exempt Trust. To the extent the Settlor's GST exemption is allocated to this Trust, the Trustee shall administer the GST-exempt portion as a separate trust (or separate share) with an inclusion ratio of zero, so that no taxable distribution or taxable termination with respect to such portion is subject to GST tax.
8.3 Division of Trust. If the Trust is partially exempt and partially non-exempt for GST purposes, the Trustee shall divide the Trust into two separate trusts:
(a) A GST-Exempt Trust — with an inclusion ratio of zero; and
(b) A GST Non-Exempt Trust — with an inclusion ratio of one;
and shall administer each trust separately with the intent that the GST-Exempt Trust remains wholly exempt from GST tax in perpetuity.
8.4 Definitions.
(a) "Skip Person" means a natural person assigned to a generation two or more generations below the Settlor's generation, or a trust in which all interests are held by skip persons. (IRC § 2613.)
(b) "Non-Skip Person" means any person who is not a skip person. (IRC § 2613(b).)
(c) "Taxable Distribution" means any distribution from the Trust to a skip person. (IRC § 2612(b).)
(d) "Taxable Termination" means the termination of an interest in the Trust if, immediately after such termination, only skip persons have interests in the Trust. (IRC § 2612(a).)
8.5 Trustee Authority. The Trustee is authorized to make any election, allocation, or division necessary to optimize the GST tax treatment of this Trust, including timely filing of IRS Form 709 allocations, and shall consult with the Tax Trust Advisor (if appointed) before making such elections.
ARTICLE 9 — IRREVOCABLE LIFE INSURANCE TRUST (ILIT) PROVISIONS
(IRC § 2042)
☐ This Article applies — ILIT elected
☐ This Article does not apply — skip to Article 10
9.1 Trust as Owner and Beneficiary. The Trust shall be the owner and beneficiary of all life insurance policies listed in Schedule A or subsequently acquired by the Trustee. The Settlor shall have no incidents of ownership in any such policy, including but not limited to the right to change beneficiaries, borrow against the policy, surrender or cancel the policy, or assign the policy.
9.2 Premium Payments. Premiums on life insurance policies owned by the Trust shall be paid from:
(a) Contributions made by the Settlor or third parties, subject to the Crummey withdrawal provisions of Article 7;
(b) Trust income or principal, in the Trustee's discretion; or
(c) Policy dividends or accumulated cash value.
9.3 Three-Year Lookback Warning. If the Settlor transfers an existing life insurance policy to this Trust, the proceeds of such policy will be included in the Settlor's gross estate under IRC § 2035 if the Settlor dies within three (3) years of the transfer. The Settlor acknowledges this risk and has been advised to consult with independent tax counsel.
9.4 Policy Management. The Trustee shall have full authority to:
(a) Apply for, acquire, and maintain life insurance policies on the life of the Settlor, the Settlor's spouse, or any other insurable person;
(b) Pay premiums and policy assessments;
(c) Exercise policy options, including conversion, exchange, and replacement;
(d) Borrow against policy cash values (subject to fiduciary duty);
(e) Collect and receipt for death benefits; and
(f) Compromise, settle, or litigate claims against insurance carriers.
9.5 Disposition of Proceeds. Upon the death of the insured, the Trustee shall collect the death benefit proceeds and administer them as part of the Trust Estate in accordance with the distribution provisions of Article 11 and Schedule C.
ARTICLE 10 — INTENTIONALLY DEFECTIVE GRANTOR TRUST (IDGT) PROVISIONS
(IRC §§ 671–679)
☐ This Article applies — IDGT elected
☐ This Article does not apply — skip to Article 11
10.1 Grantor Trust Status. The Settlor intends that this Trust be treated as a grantor trust under IRC §§ 671–679 for federal and state income tax purposes. To achieve this status, the following intentional "defect" provision(s) are incorporated (check one or more):
☐ Swap Power (IRC § 675(4)(C)). The Settlor retains the power, exercisable in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity, to reacquire Trust property by substituting other property of an equivalent value, determined at the time of substitution.
☐ Power to Borrow (IRC § 675(2)). The Settlor retains the power to borrow from the Trust without adequate interest or security.
☐ Spousal Beneficiary (IRC § 677). The Settlor's spouse is a discretionary beneficiary of the Trust, and distributions of Trust income may be made for the benefit of the Settlor's spouse.
☐ Other intentional defect: [________________________________]
10.2 Swap Power Procedures. If the swap power is elected:
(a) The Settlor may exercise the swap power at any time by delivering substitute property of equivalent value to the Trustee and receiving Trust property of equivalent value in exchange;
(b) The Trustee shall cooperate with the swap but shall independently verify that the substitute property is of equivalent value;
(c) Equivalent value shall be determined by fair market value at the time of substitution; and
(d) The swap power shall not be exercisable in a manner that shifts economic benefits between the Settlor and the Trust.
10.3 Toggle Provision — Grantor to Non-Grantor Conversion. The Settlor may relinquish any or all grantor trust powers at any time by written notice to the Trustee, thereby converting the Trust from grantor trust status to non-grantor trust status. Upon conversion:
(a) The Trust shall obtain its own Employer Identification Number (EIN) from the IRS;
(b) The Trustee shall file fiduciary income tax returns (IRS Form 1041) for all subsequent tax years; and
(c) The Trust shall be treated as a separate taxable entity for federal and state income tax purposes.
10.4 Tax Identification. While this Trust is a grantor trust, all Trust income shall be reported on the Settlor's individual income tax return using the Settlor's Social Security Number. The Trustee shall provide the Settlor with all information necessary for timely tax reporting.
ARTICLE 11 — BENEFICIAL INTERESTS AND DISTRIBUTIONS
11.1 Beneficiaries. The beneficiaries of this Trust are designated in Schedule B. The Settlor may also be a beneficiary if DAPT status is elected under Article 5.
11.2 Income Distributions. The Trustee shall distribute or accumulate net income of the Trust as follows:
☐ Mandatory income distribution — The Trustee shall distribute all net income at least annually to [________________________________]
☐ Discretionary income distribution — The Trustee may, in the Trustee's sole and absolute discretion, distribute income to or among the beneficiaries
☐ Accumulate all income — The Trustee shall accumulate all income as principal
11.3 Principal Distributions. The Trustee may, in the Trustee's sole and absolute discretion, distribute principal to or for the benefit of any beneficiary. Distributions may be made pursuant to:
☐ HEMS Standard — For the health, education, maintenance, and support of beneficiaries, considering the beneficiary's other resources
☐ Wholly Discretionary — In the Trustee's sole and absolute discretion, for any purpose the Trustee deems appropriate, without limitation to any ascertainable standard
☐ Custom Standard — [________________________________]
11.4 Staggered Distributions (Optional). In addition to discretionary distributions, the Trustee shall make the following mandatory distributions of principal:
☐ This section does not apply — no staggered distributions
☐ Staggered distributions as follows:
At age [____]: [____]% of the then-current Trust principal
At age [____]: [____]% of the then-remaining Trust principal
At age [____]: The remaining Trust principal outright
11.5 Termination Distributions. Upon termination of the Trust (or any trust share), the Trustee shall distribute the remaining Trust Estate to the then-living beneficiaries as provided in Schedule C.
ARTICLE 12 — SPENDTHRIFT PROVISIONS
(SDCL § 55-1-24)
12.1 Spendthrift Clause. To the maximum extent permitted by South Dakota law, no beneficiary shall have the power to anticipate, assign, alienate, encumber, hypothecate, or otherwise voluntarily transfer any interest in the Trust Estate, whether income or principal, before actual receipt. No interest of any beneficiary shall be subject to the claims of any creditor, spouse (present or former), or any other person, or to any legal process, garnishment, attachment, execution, bankruptcy proceeding, or other involuntary transfer, before actual receipt by the beneficiary.
12.2 Discretionary Trust Protection. To the extent that distributions from this Trust are subject to the Trustee's discretion, a creditor of a beneficiary (including the Settlor, if the Settlor is a beneficiary under Article 5) may not compel the Trustee to make a distribution, attach the Trust property, or reach the beneficiary's interest in the Trust, even if the Trustee has abused its discretion or has elected to make a distribution directly to a third party on behalf of the beneficiary. (SDCL § 55-1-24.)
12.3 Exception Creditors. The spendthrift provisions of this Article shall not apply to the extent required by applicable law for:
(a) Court-ordered child support or alimony obligations;
(b) Claims by the United States or the State of South Dakota;
(c) Judgments for restitution arising from criminal conduct; and
(d) Such other claims as South Dakota law may require.
ARTICLE 13 — DIRECTED TRUST PROVISIONS
(SDCL §§ 55-1B-1 to 55-1B-8)
13.1 Directed Trust Election. This Trust is a directed trust under SDCL §§ 55-1B-1 to 55-1B-8:
☐ Yes — This is a directed trust. Complete Sections 13.2 through 13.6.
☐ No — This is not a directed trust. Skip to Article 14.
13.2 Investment Trust Advisor. The following individual or entity is appointed as Investment Trust Advisor with exclusive authority over investment decisions (SDCL § 55-1B-3):
| Field | Information |
|---|---|
| Name | [________________________________] |
| Title / Firm | [________________________________] |
| Address | [________________________________] |
| Qualifications | [________________________________] |
The Investment Trust Advisor shall have the power to direct the Trustee with respect to the retention, purchase, sale, exchange, tender, and management of Trust investments, including alternative investments, private equity, real estate, and cryptocurrency.
13.3 Distribution Trust Advisor. The following individual or entity is appointed as Distribution Trust Advisor with exclusive authority over distribution decisions (SDCL § 55-1B-4):
| Field | Information |
|---|---|
| Name | [________________________________] |
| Title / Firm | [________________________________] |
| Address | [________________________________] |
The Distribution Trust Advisor shall have the power to direct the Trustee with respect to all distributions of income and principal to beneficiaries.
13.4 Tax Trust Advisor. The following individual or entity is appointed as Tax Trust Advisor (SDCL § 55-1B-6, added 2025):
| Field | Information |
|---|---|
| Name | [________________________________] |
| Title / Firm | [________________________________] |
| Address | [________________________________] |
The Tax Trust Advisor shall have the power to direct the Trustee with respect to all tax elections, filings, allocations, and related decisions, including GST exemption allocation, Section 643(e) elections, and grantor trust status determinations.
13.5 Directed Trustee Liability Protection. The Trustee, when acting upon the direction of an Investment Trust Advisor, Distribution Trust Advisor, Tax Trust Advisor, or Trust Protector, shall not be liable for any loss resulting from such directed action, provided the Trustee acts in accordance with the direction and the direction does not constitute a willful violation of the terms of this Agreement. (SDCL § 55-1B-2.)
13.6 Advisor Compensation. Each advisor appointed under this Article shall receive reasonable compensation as agreed between the advisor and the Trustee, payable from the Trust Estate.
ARTICLE 14 — TRUST PROTECTOR
(SDCL § 55-1B-5)
14.1 Appointment. The following individual or entity is appointed as Trust Protector:
| Field | Information |
|---|---|
| Name | [________________________________] |
| Address | [________________________________] |
| Successor Trust Protector | [________________________________] |
14.2 Powers. The Trust Protector shall have the following powers, exercisable in the Trust Protector's sole and absolute discretion:
(a) Remove and appoint Trustees, Investment Trust Advisors, Distribution Trust Advisors, and Tax Trust Advisors;
(b) Approve or veto administrative amendments proposed under Section 3.2;
(c) Modify the Trust to take advantage of changes in tax law or to correct drafting errors;
(d) Add or remove beneficiaries (excluding the Settlor, unless DAPT is elected);
(e) Change the situs of the Trust to another jurisdiction;
(f) Terminate the Trust in whole or in part;
(g) Resolve ambiguities in this Agreement;
(h) Convert the Trust between grantor and non-grantor trust status;
(i) Veto distributions that may adversely affect a beneficiary's eligibility for government benefits; and
(j) Direct the Trustee to decant the Trust under Article 15.
14.3 Fiduciary Status. The Trust Protector:
☐ Shall serve in a fiduciary capacity and shall owe duties of loyalty and prudence to the beneficiaries
☐ Shall serve in a nonfiduciary capacity and shall not owe fiduciary duties to the beneficiaries, except the duty to act in good faith
14.4 Liability. The Trust Protector shall not be liable for any action taken in good faith. The Trust Protector shall be liable only for actions taken in bad faith or with willful misconduct.
14.5 Compensation. The Trust Protector shall receive reasonable compensation as determined by agreement, payable from the Trust Estate.
ARTICLE 15 — DECANTING
(SDCL §§ 55-2-13 to 55-2-21, expanded by SB 69, 2025)
15.1 Decanting Authority. The Trustee (or the Trust Protector, if so authorized under Section 14.2(j)) may, without court approval, decant (i.e., distribute) all or part of the Trust Estate to a new trust (the "Receiving Trust"), provided that:
(a) The Trustee has discretionary authority over distributions of principal;
(b) The Receiving Trust benefits one or more beneficiaries of this Trust;
(c) The decanting does not violate the terms of this Agreement or applicable law; and
(d) The Trustee provides written notice to all qualified beneficiaries at least sixty (60) days before the decanting, unless notice is waived by all qualified beneficiaries.
(SDCL § 55-2-15.)
15.2 Purposes for Decanting. Decanting may be used, among other purposes, to:
(a) Correct drafting errors or ambiguities;
(b) Modify administrative provisions;
(c) Take advantage of changes in tax law;
(d) Change the trust situs;
(e) Add or modify trust protector or directed trust provisions;
(f) Divide or consolidate trusts; or
(g) Modify distribution provisions to better serve the beneficiaries' needs.
15.3 Tax Considerations. The Trustee shall consult with tax counsel before decanting to ensure that the decanting does not adversely affect the Trust's GST exemption allocation, grantor trust status, or other tax characteristics.
ARTICLE 16 — DIGITAL ASSETS
16.1 Authority. The Trustee shall have full authority to access, manage, control, and dispose of all digital assets of the Trust, including but not limited to:
(a) Electronic communications (email, messaging accounts);
(b) Social media accounts;
(c) Cloud storage and digital files;
(d) Cryptocurrency, blockchain-based assets, digital tokens, and NFTs;
(e) Digital financial accounts (online banking, brokerage, payment platforms);
(f) Domain names, websites, and digital intellectual property; and
(g) Any other digital asset as defined by applicable law.
16.2 Content and Catalogue Consent. The Settlor consents to the Trustee's access to both the content of electronic communications and the catalogue of electronic communications stored by any custodian.
16.3 Digital Asset Inventory. The Settlor shall maintain a secure inventory of digital assets, including access credentials, and shall provide this inventory to the Trustee or Trust Protector.
ARTICLE 17 — TRUSTEE PROVISIONS
17.1 Initial Trustee. The initial Trustee is identified in Section 1.4.
17.2 Co-Trustees. If more than one Trustee is serving, the co-Trustees shall act:
☐ Unanimously
☐ By majority vote
☐ Independently (each co-Trustee may act alone)
17.3 Successor Trustees. If the initial Trustee ceases to serve, the following shall serve as successor Trustees in the order listed:
| Priority | Name | Address |
|---|---|---|
| First Successor | [________________________________] | [________________________________] |
| Second Successor | [________________________________] | [________________________________] |
| Third Successor | [________________________________] | [________________________________] |
17.4 Qualified Trustee Succession. If this Trust is a Qualified Spendthrift Trust under Article 5, any successor Trustee must satisfy the qualified trustee requirements of SDCL § 55-16-5 as described in Section 5.3. If a successor Trustee does not qualify, the Trust Protector (or, if no Trust Protector is serving, the remaining Trustee or the adult beneficiaries by majority vote) shall appoint a qualified co-Trustee.
17.5 Trustee Powers. In addition to the powers granted elsewhere in this Agreement, the Trustee shall have all powers enumerated in SDCL § 55-4-1 et seq., and all powers necessary or advisable for the administration of the Trust, including:
(a) Invest and reinvest the Trust Estate in any property, without limitation, including stocks, bonds, real estate, private equity, hedge funds, cryptocurrency, and alternative investments;
(b) Retain assets received from the Settlor without regard to diversification;
(c) Lease, sell, exchange, mortgage, or otherwise dispose of Trust property;
(d) Borrow funds, with or without security;
(e) Lend funds to beneficiaries on terms determined by the Trustee;
(f) Vote stock and exercise options;
(g) Participate in mergers, consolidations, and reorganizations;
(h) Compromise, settle, or litigate claims;
(i) Employ and compensate attorneys, accountants, investment advisors, and other professionals;
(j) Make tax elections and allocations;
(k) Distribute in cash or in kind;
(l) Establish and maintain reserves;
(m) Determine what is income and what is principal;
(n) Exercise all rights with respect to life insurance policies;
(o) Form, operate, or dissolve entities (LLCs, partnerships, corporations) to hold Trust assets; and
(p) Execute any document necessary to carry out the foregoing powers.
17.6 Prudent Investor Rule. The Trustee shall invest and manage Trust assets as a prudent investor would, considering the purposes, terms, distribution requirements, and other circumstances of the Trust. (SDCL § 55-3-25.)
17.7 Compensation. The Trustee shall receive compensation as follows:
☐ Reasonable compensation under SDCL § 55-4-1 et seq.
☐ Compensation of [____]% of Trust assets annually
☐ Compensation of $[________________________________] per year
☐ No compensation (voluntary service)
17.8 Resignation. The Trustee may resign by giving sixty (60) days' written notice to the Trust Protector (if appointed) and the adult beneficiaries.
17.9 Removal. The Trustee may be removed by:
(a) The Trust Protector, at any time, with or without cause;
(b) A court of competent jurisdiction, for cause; or
(c) Unanimous written agreement of all adult beneficiaries, if no Trust Protector is serving.
17.10 Accounting. The Trustee shall provide annual written accountings to all qualified beneficiaries within ninety (90) days after the end of each calendar year, including a statement of all receipts, disbursements, distributions, and the fair market value of all Trust assets.
17.11 Trustee Indemnification. The Trust Estate shall indemnify the Trustee against all liabilities and expenses (including reasonable attorneys' fees) arising from the good-faith administration of the Trust, except to the extent resulting from the Trustee's fraud, willful misconduct, or gross negligence.
17.12 Trustee Exculpation. The Trustee shall not be liable for any loss or depreciation in value of Trust assets resulting from the Trustee's good-faith exercise of discretion, even if such exercise is later determined to have been imprudent, provided the Trustee acted in accordance with the prudent investor standard.
ARTICLE 18 — NO-CONTEST CLAUSE
18.1 No-Contest Provision. If any beneficiary, directly or indirectly, contests the validity of this Trust or any of its provisions, or seeks to obtain an adjudication that this Trust or any provision is void, or seeks to void any transfer to this Trust, such beneficiary shall forfeit any and all interests in the Trust Estate, and the Trust shall be administered as if such beneficiary had predeceased the Settlor.
18.2 Exception for Good Faith. The no-contest provision of Section 18.1 shall not apply to any action brought in good faith and with probable cause, as determined by a court of competent jurisdiction.
ARTICLE 19 — TAX PROVISIONS
19.1 South Dakota Tax Advantage. The Settlor acknowledges that South Dakota does not impose any state income tax, capital gains tax, dividend tax, or interest income tax, and that this constitutional prohibition on state income tax provides a significant tax advantage for Trust income accumulated in this Trust.
19.2 Federal Tax Elections. The Trustee (or Tax Trust Advisor, if appointed) is authorized to make any federal tax election available under the Internal Revenue Code, including but not limited to:
(a) Election to treat the Trust (or any portion thereof) as a grantor trust under IRC §§ 671–679;
(b) Allocation of GST exemption under IRC § 2631;
(c) QTIP election under IRC § 2056(b)(7);
(d) Section 643(e) election to recognize gain on in-kind distributions;
(e) Section 645 election to treat a trust and an estate as a single entity; and
(f) Any other election that the Trustee or Tax Trust Advisor determines to be in the best interests of the Trust and its beneficiaries.
19.3 Tax Reporting. While this Trust is a grantor trust, all Trust income shall be reported on the Settlor's individual income tax return. If this Trust is a non-grantor trust, the Trustee shall file IRS Form 1041 and distribute Schedules K-1 to beneficiaries.
19.4 Tax Apportionment. Federal estate or GST taxes attributable to the Trust Estate, if any, shall be apportioned and paid as follows:
☐ From the Trust Estate, without apportionment against beneficiaries
☐ Apportioned among beneficiaries in proportion to their interests
☐ As directed by the Settlor's will or other estate planning documents
ARTICLE 20 — GENERAL PROVISIONS
20.1 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to make it valid and enforceable.
20.2 Nonjudicial Settlement. The Trustee, Trust Protector, and beneficiaries may enter into a nonjudicial settlement agreement under SDCL § 55-1-36 to resolve any matter involving the Trust without court approval, provided the agreement does not violate a material purpose of the Trust.
20.3 Certification of Trust. The Trustee may present a certification of trust in the form attached as Schedule E to any third party in lieu of presenting the full Trust Agreement, and such third party may rely on the certification without further inquiry.
20.4 Privacy. This Trust Agreement is a private document. The Settlor and Trustee shall not file or register this Agreement with any state or federal agency unless required by law. South Dakota does not require trust registration.
20.5 No Assignment. No party may assign rights or delegate duties under this Agreement except as expressly permitted herein.
20.6 Successors and Assigns. This Agreement binds and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.
20.7 Notices. All notices under this Agreement shall be in writing and delivered personally, by certified mail (return receipt requested), or by nationally recognized overnight courier to the addresses set forth herein or such other address as a party may designate in writing.
20.8 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. Electronic signatures shall be deemed originals to the fullest extent permitted by law.
20.9 Construction. Words of one gender include all genders. Words used in the singular include the plural and vice versa. Section headings are for convenience only and shall not affect interpretation.
ARTICLE 21 — EXECUTION
21.1 Settlor's Signature.
I, [________________________________], declare that I am the Settlor identified in this Agreement. I am at least eighteen (18) years of age, of sound mind, and I execute this Agreement voluntarily, without fraud, duress, or undue influence. I have read this Agreement, understand its contents and legal effect, and intend to create an irrevocable trust under the laws of the State of South Dakota.
Signature: __________________________________
Printed Name: [________________________________]
Date: [__/__/____]
21.2 Trustee's Acceptance.
I, [________________________________], accept appointment as Trustee of this Trust and agree to hold, administer, and distribute the Trust Estate in accordance with the terms of this Agreement and applicable South Dakota law. I acknowledge my fiduciary duties under SDCL Title 55.
Signature: __________________________________
Printed Name / Entity Name: [________________________________]
Title (if entity): [________________________________]
Date: [__/__/____]
21.3 Notary Acknowledgment — Settlor.
State of South Dakota )
) ss.
County of [________________________________] )
On this [____] day of [________________________________], [____], before me, [________________________________], a Notary Public in and for said state, personally appeared [________________________________], known to me (or proved on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.
Signature: __________________________________
Notary Public, State of South Dakota
My Commission Expires: [__/__/____]
(Seal)
21.4 Notary Acknowledgment — Trustee.
State of South Dakota )
) ss.
County of [________________________________] )
On this [____] day of [________________________________], [____], before me, [________________________________], a Notary Public in and for said state, personally appeared [________________________________], known to me (or proved on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.
Signature: __________________________________
Notary Public, State of South Dakota
My Commission Expires: [__/__/____]
(Seal)
SCHEDULE A — INITIAL TRUST PROPERTY
| # | Description of Property | Approximate Value | Transfer Type |
|---|---|---|---|
| 1 | [________________________________] | $[________________________________] | ☐ DAPT ☐ Standard |
| 2 | [________________________________] | $[________________________________] | ☐ DAPT ☐ Standard |
| 3 | [________________________________] | $[________________________________] | ☐ DAPT ☐ Standard |
| 4 | [________________________________] | $[________________________________] | ☐ DAPT ☐ Standard |
| 5 | [________________________________] | $[________________________________] | ☐ DAPT ☐ Standard |
Asset Categories:
☐ Cash and cash equivalents
☐ Publicly traded securities
☐ Private equity / closely held business interests
☐ Real property (attach legal description)
☐ Life insurance policies (attach policy schedule)
☐ Cryptocurrency and digital assets
☐ Personal property
☐ Other: [________________________________]
Total Approximate Value of Initial Trust Property: $[________________________________]
SCHEDULE B — BENEFICIARY DESIGNATIONS AND CRUMMEY RIGHTS
| # | Beneficiary Name | Relationship | Crummey Rights? | Share / Percentage |
|---|---|---|---|---|
| 1 | [________________________________] | [________________________________] | ☐ Yes ☐ No | [____]% |
| 2 | [________________________________] | [________________________________] | ☐ Yes ☐ No | [____]% |
| 3 | [________________________________] | [________________________________] | ☐ Yes ☐ No | [____]% |
| 4 | [________________________________] | [________________________________] | ☐ Yes ☐ No | [____]% |
| 5 | [________________________________] | [________________________________] | ☐ Yes ☐ No | [____]% |
Contingent Beneficiaries (if all primary beneficiaries predecease):
| # | Contingent Beneficiary | Relationship | Share |
|---|---|---|---|
| 1 | [________________________________] | [________________________________] | [____]% |
| 2 | [________________________________] | [________________________________] | [____]% |
SCHEDULE C — DISTRIBUTION PROVISIONS
During the Settlor's Lifetime:
☐ Distributions to the Settlor (DAPT only): [________________________________]
☐ Distributions to beneficiaries: [________________________________]
Upon the Settlor's Death:
☐ Continue in trust for beneficiaries per the terms of this Agreement
☐ Distribute outright to beneficiaries per Schedule B
☐ Divide into separate trust shares for each beneficiary
☐ Other: [________________________________]
Staggered Distribution Schedule (if applicable):
| Triggering Event / Age | Distribution |
|---|---|
| [________________________________] | [________________________________] |
| [________________________________] | [________________________________] |
| [________________________________] | [________________________________] |
Ultimate Distribution (if all named beneficiaries predecease):
☐ Distribute to Settlor's heirs at law under South Dakota intestacy statutes
☐ Distribute to the following charitable organization(s): [________________________________]
SCHEDULE D — SETTLOR AFFIDAVIT (QUALIFIED SPENDTHRIFT TRUST)
(Required by SDCL § 55-16-15)
AFFIDAVIT OF SETTLOR
State of South Dakota )
) ss.
County of [________________________________] )
I, [________________________________], being first duly sworn, depose and state under oath as follows:
-
I am the Settlor of the [________________________________] Irrevocable Trust (the "Trust"), dated [__/__/____].
-
I have full legal authority to transfer the property described in Schedule A to the Trust.
-
The property transferred to the Trust was not obtained through unlawful activity.
-
The transfer of property to the Trust will not render me insolvent. After the transfer, the fair market value of my remaining assets will exceed my total liabilities.
-
I do not intend to defraud any creditor by making this transfer.
-
☐ I am not a party to any pending or threatened litigation as of the date of this Affidavit.
☐ I am a party to the following pending or threatened litigation (disclose): [________________________________] -
☐ I am not involved in any pending or threatened administrative proceeding.
☐ I am involved in the following administrative proceeding (disclose): [________________________________] -
I am not in default of any court-ordered child support obligation.
-
I am not contemplating filing for bankruptcy.
-
I maintain personal liability insurance coverage of at least $1,000,000 or in an amount equal to the fair market value of the assets transferred to the Trust, whichever is greater:
Insurance Carrier: [________________________________]
Policy Number: [________________________________]
Coverage Amount: $[________________________________]
Effective Dates: [__/__/____] to [__/__/____]
I declare under penalty of perjury under the laws of the State of South Dakota that the foregoing is true and correct.
Signature: __________________________________
Printed Name: [________________________________]
Date: [__/__/____]
Subscribed and sworn to before me on [__/__/____].
Signature: __________________________________
Notary Public, State of South Dakota
My Commission Expires: [__/__/____]
(Seal)
SCHEDULE E — CERTIFICATION OF TRUST
CERTIFICATION OF TRUST
The undersigned Trustee hereby certifies the following facts with respect to the [________________________________] Irrevocable Trust:
-
Trust Name: [________________________________]
-
Date of Execution: [__/__/____]
-
Settlor(s): [________________________________]
-
Current Trustee(s): [________________________________]
-
Trust Protector (if any): [________________________________]
-
Trust Situs: South Dakota
-
Governing Law: South Dakota (SDCL Title 55)
-
Trust Type: ☐ Qualified Spendthrift Trust (DAPT) ☐ Dynasty Trust ☐ ILIT ☐ IDGT ☐ Standard Irrevocable
-
Irrevocable: Yes — this Trust is irrevocable.
-
Trustee Powers: The Trustee has the powers described in Article 17 of the Trust Agreement, including the power to buy, sell, invest, borrow, and manage Trust assets.
-
Tax Identification Number: [________________________________]
-
This Certification is made in lieu of presenting the full Trust Agreement. Any third party may rely on this Certification in dealing with the Trustee regarding Trust assets.
Trustee Signature: __________________________________
Printed Name: [________________________________]
Date: [__/__/____]
SOURCES AND REFERENCES
South Dakota Trust Statutes
- SDCL § 43-5-8 — Rule Against Perpetuities Abolished
- SDCL Chapter 55-16 — Qualified Dispositions in Trust (DAPT)
- SDCL §§ 55-1B-1 to 55-1B-8 — Directed Trusts
- SDCL § 55-1-24 — Spendthrift Provisions
- SDCL §§ 55-2-13 to 55-2-21 — Decanting
- SDCL § 55-1-36 — Nonjudicial Settlement Agreements
- SDCL § 55-4-1 et seq. — Trustee Powers
- SDCL § 55-3-25 — Prudent Investor Rule
- SDCL §§ 51A-6A-1 to 51A-6A-63 — Private Trust Companies
Federal Tax Statutes
- IRC § 2042 — Proceeds of Life Insurance (Incidents of Ownership)
- IRC § 2503(b) — Annual Gift Tax Exclusion
- IRC § 2514 — Powers of Appointment (5-and-5 Lapse)
- IRC § 2601 et seq. — Generation-Skipping Transfer Tax
- IRC §§ 671–679 — Grantor Trust Rules
- IRC § 675(4)(C) — Swap Power
Resources
- South Dakota Trust Association
- South Dakota Division of Banking — Trust Companies
- Trusts & Estates Magazine — State Rankings
Prepared for attorney review. This template is provided for informational purposes only and does not constitute legal advice.
About This Template
Estate planning documents decide what happens to your property, your children, and your medical care when you cannot make those decisions yourself. Wills, trusts, powers of attorney, and health care directives each serve different purposes and each have to meet state law requirements for signing, witnessing, and notarization. A document that looks fine on the page but was not executed correctly can be rejected in probate, which is exactly when it is too late to fix.
Important Notice
This template is provided for informational purposes. It is not legal advice. We recommend having an attorney review any legal document before signing, especially for high-value or complex matters.
Last updated: April 2026