South Dakota Wills vs. Trusts
Navigating South Dakota estate planning doesn’t have to be overwhelming. The Mount Rushmore State offers some of the most favorable trust laws in the nation, including dynasty trusts, exceptional privacy protections, and powerful asset protection options. Whether you’re considering a will or trust, understanding the key differences can save your family significant time, money, and stress while preserving your legacy for generations to come.
Table of Contents
US Map For The Different Will and Trust Requirements by State
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South Dakota Will Requirements
A South Dakota Last Will and Testament should include:
- Age and Capacity: Testator must be “of sound mind” and at least 18 years old
- Format: Must be in writing
- Signature: Must be signed by the testator or by someone signing the testator’s name at the testator’s direction while in the testator’s presence
- Witnesses: Must be signed by at least two witnesses while in the testator’s conscious presence
Witness Requirements
South Dakota is considered one of the best states for trusts due to several factors. First, South Dakota has no state income tax, capital gains tax, or inheritance/estate tax, meaning trust assets can grow without state-level taxation. Second, South Dakota allows dynasty trusts to continue in perpetuity without being subject to the Rule Against Perpetuities that limits trust duration in many states. Third, the state provides exceptional asset protection through Domestic Asset Protection Trusts (DAPTs), which shield assets from most creditors. Fourth, South Dakota offers superior privacy protections, with no public registration requirement for trusts and strict privacy laws. Finally, South Dakota’s directed trust statutes allow for the separation of investment management from distribution decisions, providing flexibility in trust administration. These advantages make South Dakota attractive even for non-residents seeking to establish trusts.
For South Dakota wills:
- Witnesses must observe the testator signing the will or acknowledging that the signature is genuine
- Any individual who is generally competent to act as a witness may serve as witness
- A will is not invalid solely because it is witnessed by an interested person (i.e., someone with an interest in the testator’s estate)
Harmless Error Rule
South Dakota employs the “harmless error” rule: a written document that does not technically satisfy all formalities for a will may be treated as valid if there is clear and convincing evidence that the decedent intended the document to be their will.
Self-Proved Wills
Though South Dakota wills need not be notarized, a will can be made “self-proved” through execution of a compliant affidavit by the testator and witnesses. When a will is self-proved:
- It can be admitted to probate without requiring testimony from witnesses
- The affidavit can be executed simultaneously with the will or later
- The affidavit states that the testator voluntarily signed the will with the required legal capacity and while under no constraint or undue influence
The South Dakota legislature provides a form self-proved affidavit, at S.D. Cod. Law §29A-2-504.
Personal Property Memorandum
South Dakota specifically authorizes incorporation by reference of a written statement or list disposing of tangible personal property. To be valid, the memorandum must:
- Be referenced in the will
- Be signed by the testator
- Identify each tangible personal property item and its intended beneficiary with reasonable certainty
A personal property memorandum can be created before or after execution of the will and can be altered by the testator. It can be used to dispose of any tangible personal property items not distributed by the will other than money.
No-Contest Clauses
No-contest (or “in terrorem“) clauses—which penalize an interested person for contesting a will or initiating estate-related proceedings—are unenforceable under South Dakota law if the contesting person has probable cause for contesting the will.
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Amendment, Revision, and Revocation of South Dakota Wills
Amending a South Dakota Will
A South Dakota will can be amended through:
- Execution of a later will
- Execution of a codicil (an addendum to an existing will) that satisfies all formalities for execution of a valid will
Revoking a South Dakota Will
South Dakota wills can be revoked by:
- A “revocatory act” performed by the testator (or by another person in the testator’s presence at the testator’s direction) with the intent to revoke the will or any part thereof
- Physical destruction of the document—such as through burning, tearing, or canceling—with the intent to revoke
- Executing a later will that revokes the prior will expressly or due to inconsistency
Later Wills Without Express Revocation
When dealing with multiple wills without express revocation clauses:
- A later will that completely disposes of the testator’s estate is presumed to revoke the prior will by inconsistency
- A later will that does not completely dispose of the estate is presumed to supplement the earlier will
- If provisions conflict between wills, the later will controls
Automatic Revocation by Divorce
If a testator or trustor divorces after executing a South Dakota will or revocable trust:
- Any revocable provisions in favor of the former spouse (or a relative of the former spouse) are deemed to have been revoked
- Revoked dispositions are treated as though the former spouse disclaimed the interest
- An individual who has been divorced from a decedent does not qualify as a “surviving spouse” for other probate purposes
This provision doesn’t apply if the will or trust instrument, a property settlement agreement, or court order states that the testator’s divorce does not affect the will or trust.
Marriage After Will Execution
If a testator marries after execution of a will and the spouse survives the testator, the surviving spouse is entitled to a share in the estate as if the testator had died intestate. This provision doesn’t apply if:
- The will was made in contemplation of the marriage
- The will states that it is effective notwithstanding a later marriage
- The testator made other provisions for the surviving spouse outside the will intended in lieu of the will
Children Born After Will Execution
If a child is born to or adopted by a testator after execution of a will—and if the will does not provide for or otherwise mention the child—the after-born child may be entitled to an interest in the testator’s estate:
- If the testator had no other children when creating the will, the share is equal to what the child would have inherited had the testator died intestate
- If the testator had other children when making the will, the share is based upon and limited by the devises to the other children
This provision doesn’t apply if the will leaves substantially all of the estate to the child’s other parent.
Holographic and Oral Wills
Holographic Wills
A signed document intended as a will but that is not witnessed may constitute a valid holographic will if:
- The signature and all material provisions are in the testator’s handwriting
Evidence outside of the document itself can be used to establish in probate that the testator intended the document to be the testator’s will.
Oral Wills
Oral (or “nuncupative”) wills are not recognized under South Dakota law.
South Dakota Trust Requirements
South Dakota is considered one of the best jurisdictions for creating trusts, and the state’s trust laws are designed to encourage out-of-state residents to domicile trusts in South Dakota. The South Dakota Legislature has not adopted the Uniform Trust Code approach used by the majority of states. Rules governing South Dakota trusts are instead derived from South Dakota’s sophisticated statutory framework and common law.
Trust Parties
South Dakota trusts have three essential parties:
- Trustor: The person who funds the trust (many states use the synonym “settlor”)
- Trustee: The party who manages and holds legal title to trust property
- Beneficiary: The person designated to enjoy the benefits of the trust without holding legal title to trust property
South Dakota allows for overlap between a trust’s parties. For example, a trust’s trustor can also be the sole trustee and sole beneficiary during the trustor’s life—as long as the trust provides for a successor beneficiary after the trustor’s death.
Optional Trust Roles
South Dakota’s trust laws authorize other optional roles that can be designated within a trust instrument:
- Trust Protector: Empowered to enforce the terms of the trust
- Trust Advisor: Consults with or instructs the trustee regarding investment of trust assets and distributions to beneficiaries
Types of Trusts
A South Dakota trust can be either “express” or “implied”:
- Express Trust: A trust relationship which the trustor intends to create and the trustee voluntarily accepts
- Implied Trust: Created by operation of law and circumstances under which one party holds property on behalf of another
Express trusts are used more often in estate planning.
Requirements for a Valid South Dakota Trust
To create a South Dakota express trust:
- A trustor must articulate an intent to create a trust through words or actions
- The trustee’s words or actions must indicate the trustee’s acceptance or acknowledgement of the trust
- The words or actions of both trustor and trustee must indicate the trust’s subject matter, purpose, and beneficiary
A South Dakota trust can hold any type of property and serve any purpose for which parties could enter into a lawful contract.
Trust Documentation
A trust’s terms are typically (but not always) written within a declaration of trust or similar trust instrument. South Dakota law requires a trust that concerns real estate to be evidenced in writing.
A written declaration of trust:
- Expresses the nature, extent, and object of the trust
- Can expand, restrict, eliminate, or otherwise vary the default rules that ordinarily apply to South Dakota trusts or trust administration
Revocability
Trusts are either revocable or irrevocable:
- Revocable Trust: The trustor retains the right to modify or terminate the revocable trust
- Irrevocable Trust: The trustor surrenders the right to modify or revoke the trust
Irrevocable trusts generally give the trustor less long-term control but sometimes offer tax, asset-protection, and other estate-planning advantages revocable trusts do not provide.
South Dakota trusts are irrevocable by default unless the trustor expressly reserves the right to modify or revoke the trust.
Trustee Responsibilities
Trustees are considered fiduciaries and must:
- Administer trust assets in good faith
- Avoid self-dealing
A trustee of a South Dakota trust ordinarily has authority to manage trust assets by investing, selling, borrowing against, and leasing trust property. However, South Dakota allows a trustor to exclude certain trustee powers though express provisions of a trust instrument.
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Special Considerations
Estate Taxes
No Estate or Inheritance Taxes
South Dakota does not impose either estate or inheritance taxes. Large South Dakota estates may still be liable for federal estate taxes.
Simplified Probate
South Dakota law allows for an informal probate process that simplifies administration of eligible estates:
- An interested person petitions for informal probate or for informal appointment of a personal representative by submitting a verified application to the probate clerk
- The application identifies the applicant’s interest in the estate and provides information about the decedent and estate circumstances
- If the clerk determines that all requirements are met, the clerk enters an order granting informal probate or informal appointment
Small Estate Affidavit
South Dakota also allows a person entitled to possession of an estate’s personal property to collect the property using an executed affidavit if:
- The value of the net estate does not exceed $50,000
Non-Probate Transfers
Along with living trusts, South Dakota provides several additional options for transferring assets outside probate:
Transfer-on-Death Deeds and Vehicle Titles
Transfer-on-Death Deeds
South Dakota is among the states that authorize transfer-on-death deeds for real estate (also called “TOD deeds” or “beneficiary deeds”). Ownership of real property subject to a TOD deed automatically transfers to the named beneficiary upon the owner’s death, avoiding the need for probate.
Vehicle Titles
South Dakota does not recognize TOD designations on vehicle titles.
Dynasty Trusts
South Dakota is renowned for its dynasty trust laws, which allow trusts to continue in perpetuity without being subject to the Rule Against Perpetuities that limits trust duration in many other states. This means:
- Trusts can theoretically last forever, allowing wealth to pass through multiple generations
- Assets can remain protected from creditors, divorcing spouses, and estate taxes over many generations
- The trust can provide ongoing financial support to descendants while maintaining the trustor’s wishes regarding how assets are used
Domestic Asset Protection Trusts
South Dakota is among the states with the strongest laws authorizing Domestic Asset Protection Trusts (DAPTs)—a form of spendthrift trust that provides exceptionally strong protections against creditors.
Key Features of South Dakota DAPTs:
- They are irrevocable and self-settled (i.e., the trustor is also beneficiary)
- Assets held in a South Dakota DAPT are nearly immune from attachment and cannot be reached to satisfy most types of debts—excluding alimony, child-support, and property subject to a divorce settlement
- A creditor must demonstrate that a transfer was made with intent to defraud the creditor to set aside a transfer to a DAPT
Trustor Rights in a DAPT:
The trustor can retain certain rights without invalidating the trust, including the right to:
- Receive or veto distributions from the trust (subject to limitations)
- Advise the trustee on investments
- Decide how trust assets will be distributed after the trustor’s death (subject to limitations)
- Use real estate held in the trust
- Appoint a new trustee
Requirements for South Dakota DAPTs:
- A trustee resident in South Dakota
- A trust instrument expressly incorporating South Dakota law
- A standard for distributions that does not give the trustor an unfettered right to trust principal
Need help creating the right estate plan for your South Dakota family?
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Wills vs. Trusts: Comparison
| Feature | Wills | Trusts |
|---|---|---|
| When It Takes Effect | After death | Can be immediate (living trust) or after death (testamentary trust) |
| Probate Process | Requires probate | Assets in trust avoid probate |
| Privacy | Public record | Generally private |
| Challenges | Can be challenged in probate court | More difficult to challenge |
| Cost to Create | Generally less expensive | Usually more expensive |
| Ongoing Administration | None until death | May require ongoing management |
| Protection During Incapacity | None (requires separate power of attorney) | Can provide management if grantor becomes incapacitated |
| South Dakota Special Feature | Recognizes holographic wills and TOD deeds for real estate | Premier dynasty trust and DAPT laws with exceptional creditor protection |
Conclusion
Creating a will or trust does not have to be difficult or intimidating for South Dakota residents or those considering using South Dakota’s favorable trust laws. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests—can add complexity and result in unforeseen consequences.
South Dakota’s status as a trust-friendly jurisdiction makes it an attractive option for those seeking maximum flexibility, privacy, and asset protection. The state’s perpetual dynasty trusts and powerful Domestic Asset Protection Trusts offer advantages that few other states can match. Whenever any out-of-the-ordinary issues are present, it’s advisable to consult with an experienced attorney familiar with and licensed under South Dakota law to ensure your estate plan takes full advantage of the state’s favorable provisions while avoiding potential pitfalls.
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- ✓ Avoid costly probate and family disputes
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- ✓ Protect assets from creditors and lawsuit
- ✓ Create safeguards for children and descendants for generations
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Frequently Asked Questions About South Dakota Wills and Trusts
Do I need a lawyer to create a will in South Dakota?
While South Dakota law doesn’t require an attorney to create a valid will, consulting with an estate planning lawyer is highly recommended, especially for complex situations. South Dakota has specific requirements for valid wills, including the need for two witnesses. An attorney can help ensure your will is legally sound and properly executed. Additionally, South Dakota recognizes holographic (handwritten) wills if the signature and all material provisions are in the testator’s handwriting, but these often lack important provisions and safeguards that an attorney would include in a formal will.
What happens if I die without a will in South Dakota?
If you die without a will in South Dakota (intestate), state laws determine how your assets are distributed. Your surviving spouse would receive your entire estate if you have no children or if all your children are also your spouse’s children. If you have children from a previous relationship, your spouse receives $100,000 plus half the balance of your estate, with the remainder going to your children. If you have no spouse, assets go to descendants, then parents, then siblings, and so on according to South Dakota’s intestacy laws. Additionally, the probate court would appoint an administrator for your estate and guardians for minor children without considering your preferences.
Why is South Dakota considered one of the best states for trusts?
South Dakota is considered one of the best states for trusts due to several factors. First, South Dakota has no state income tax, capital gains tax, or inheritance/estate tax, meaning trust assets can grow without state-level taxation. Second, South Dakota allows dynasty trusts to continue in perpetuity without being subject to the Rule Against Perpetuities that limits trust duration in many states. Third, the state provides exceptional asset protection through Domestic Asset Protection Trusts (DAPTs), which shield assets from most creditors. Fourth, South Dakota offers superior privacy protections, with no public registration requirement for trusts and strict privacy laws. Finally, South Dakota’s directed trust statutes allow for the separation of investment management from distribution decisions, providing flexibility in trust administration. These advantages make South Dakota attractive even for non-residents seeking to establish trusts.
What is a Dynasty Trust and why is South Dakota famous for them?
A Dynasty Trust is a long-term trust designed to pass wealth from generation to generation without incurring estate taxes at each generational transfer. South Dakota is famous for dynasty trusts because it has abolished the Rule Against Perpetuities, which in many states limits how long a trust can last (typically 80-120 years). In South Dakota, trusts can theoretically last forever, potentially allowing assets to grow and compound over multiple generations while remaining protected from creditors, lawsuits, divorcing spouses, and estate taxes. This makes South Dakota an attractive jurisdiction for wealthy families looking to preserve assets for future generations. The state’s favorable tax laws (no state income tax, capital gains tax, or inheritance tax) further enhance the appeal of South Dakota dynasty trusts by maximizing the growth potential of trust assets over time.
How do South Dakota Domestic Asset Protection Trusts work?
South Dakota Domestic Asset Protection Trusts (DAPTs) are self-settled, irrevocable trusts that allow the creator (grantor) to be a beneficiary while still protecting assets from most creditors. To establish a valid DAPT in South Dakota, you must have a South Dakota-resident trustee, expressly incorporate South Dakota law in the trust document, and follow certain distribution standards. Once assets are transferred to the DAPT, most future creditors cannot reach them after a two-year waiting period. Unlike offshore asset protection trusts, South Dakota DAPTs offer similar protections without the complexity of dealing with foreign jurisdictions. However, DAPTs don’t protect against all claims—they don’t shield assets from existing creditors (fraudulent transfer rules apply), child support, alimony, or property division in divorce that preceded the trust’s creation. The grantor can retain certain limited powers, such as the right to veto distributions or replace trustees, without compromising the trust’s asset protection features.
Are there estate or inheritance taxes in South Dakota?
No, South Dakota does not impose either estate or inheritance taxes at the state level. This makes South Dakota one of the most tax-friendly states for estate planning purposes. South Dakota also has no state income tax, which means that income, including capital gains, generated by assets held in South Dakota trusts is not subject to state income taxation. These tax advantages are significant reasons why many individuals choose South Dakota as the situs for their trusts, even if they don’t reside in the state. However, it’s important to note that large estates may still be subject to federal estate tax if they exceed the federal exemption threshold. A properly structured estate plan that may include South Dakota trusts can help minimize overall tax burden and maximize wealth preservation.
How does South Dakota’s simplified probate process work?
South Dakota offers two main paths for simplified probate administration. First, the informal probate process allows an interested person to petition for informal probate or appointment of a personal representative by submitting a verified application to the probate clerk. The clerk reviews the application and, if requirements are met, issues an order without a formal hearing. This process is quicker and less expensive than formal probate. Second, for smaller estates with a net value not exceeding $50,000, South Dakota permits the use of a small estate affidavit. This allows a successor to collect the decedent’s personal property by presenting an affidavit to the holder of the property, completely avoiding court involvement. The affidavit must state that 30 days have passed since death, no application for appointment of a personal representative is pending, and the successor is entitled to the property. Both procedures significantly reduce the time, cost, and complexity associated with traditional probate administration.
Does South Dakota recognize holographic wills?
Yes, South Dakota recognizes holographic (handwritten) wills. For a holographic will to be valid in South Dakota, the signature and all material provisions must be in the testator’s handwriting. Unlike traditional wills, holographic wills in South Dakota don’t require witnesses. Evidence outside of the document itself can be used to establish in probate that the testator intended the document to be their will. While holographic wills are legally valid, they often lack important provisions and safeguards that an attorney would include in a formal will and may be more vulnerable to challenges. South Dakota also employs the “harmless error” rule, which means a document that doesn’t technically satisfy all formalities for a will may be treated as valid if there is clear and convincing evidence that the decedent intended the document to be their will.
