SOUTH DAKOTA WILLS AND TRUSTS REQUIREMENTS
Statutory Authority.
Wills:ย South Dakota Uniform Probate Code (S.D. Cod. Laws, Title 29-A, Chaps. 1 โ 6).
Trusts: S.D. Codified Laws, Title 55 (S.D. Cod. Laws ยงยง55-1-1, et. seq.).
South Dakota Will Requirements.
To form a valid will in South Dakota, a testator must be at least 18 years old and โof sound mind.โย South Dakota wills must be in writing and signed by the testator (or someone signing the testatorโs name at the testatorโs direction while in the testatorโs presence).ย ย
At least two witnesses must also sign the will while in the testatorโs conscious presence.ย 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 to a South Dakota will. A South Dakota will is not invalid solely because it is witnessed by an interested person (i.e., someone with an interest in the testatorโs estate).
Under South Dakota law, a written document that does not technically satisfy all formalities for a South Dakota will may be treated as a valid will if a proponent of the document establishes by clear and convincing evidence that the decedent intended the document to be the decedentโs will.ย ย
South Dakota law allows testators to incorporate within a will by reference another written document in existence when the will is executed. The will must clearly express the intent to incorporate the other document and describe it sufficiently to allow identification.
South Dakota specifically authorizes incorporation by reference of a written statement or list disposing of tangible personal property. Often called a โmemorandum of personal propertyโ or โpersonal property memorandum,โ the list must be referenced in the will and signed by the testator. Each tangible personal property item and its intended beneficiary must be identified with reasonable certainty within the personal property list.
A personal property memorandum can be created before or after execution of the will and can be altered by the testator after its initial creation. A South Dakota testator can use a personal property memorandum to dispose of any tangible personal property items not distributed by the will other than money.
South Dakota wills do not require notarization, but a will can be made โself-provedโ through execution of a compliant affidavit by the testator and witnesses.ย A self-proved affidavitโwhich can be executed simultaneously with the will or laterโstates that the testator voluntarily signed the will in the witnessesโ presence with the required legal capacity and while under no constraint or undue influence.ย When present, a self-proved affidavit serves as evidence of the willโs authenticity and allows for admission in probate without further witness testimony.ย The South Dakota legislature provides a form self-proved affidavit, at S.D. Cod. Law ยง29A-2-504.
No-contest (or โin terroremโ) clausesโwhich penalize an interested person for contesting a will or initiating estate-related proceedingsโare unenforceable under South Dakota law if the contesting person has probable cause for contesting the will.ย
Amendment, Revision, and Revocation of South Dakota Wills.
A South Dakota will can be amended through execution of a later will or codicil (an addendum to an existing will) that satisfies all formalities for execution of a valid will.ย ย
A South Dakota will may be revoked by a โrevocatory actโ performed by the testator (or by another person in the testatorโs presence at the testatorโs direction) with the intent to revoke the will or any part thereof. Revocatory acts include physical destruction of the documentโsuch as through burning, tearing, or cancelingโwith the intent to revoke.
A testator may also revoke a South Dakota will by executing a later will that revokes the prior will expressly or due to inconsistency. A later will that does not expressly revoke a prior will is presumed to revoke the prior will by inconsistency if the later will completely disposes of the testatorโs estate.ย South Dakota law presumes that a later will that does not completely dispose of the testatorโs estate was intended as a supplement to the earlier willโwith the later will controlling in the event of any conflicting provisions.
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. Revocation due to divorce is inapplicable if the will or trust instrument, a property settlement agreement, or court order states that the testatorโs divorce does not affect the will or trust. South Dakota law also expressly provides that an individual who has been divorced from a decedent does not qualify as a โsurviving spouseโ for other probate purposes.ย ย
If a South Dakota 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. A later-wed spouseโs share is inapplicable if the will was made in contemplation of the marriage, the will states that is effective notwithstanding a later marriage, or the testator made other provisions for the surviving spouse outside the will intended in lieu of the will.
If a child is born to or adopted by a South Dakota testator after execution of a willโand if the will does not provide for or otherwise mention the childโthe after-born child may be entitled to an interest in the testatorโs estate. If the testator had no other children when creating the will, the after-born childโs share is equal to what the child would have inherited had the testator died intestateโexcept that the share is inapplicable if the will leaves substantially all of the estate to the childโs other parent. If the testator had other children when making the will, the after-born childโs share is based upon and limited by the devises to the other children.ย ย
Holographic and Oral Wills.
A signed document intended as a will but that is not witnessed may nonetheless constitute a valid holographic will if the signature and all material provisions are in the testatorโs handwriting.ย Evidence outside of the document itself can be used to establish in probate that the testator intended the document to be the testatorโs will.
Oral (or โnuncupativeโ) wills are not recognized under South Dakota law.
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South Dakota Trust Requirements.
South Dakota is considered one of the best jurisdictions for creating trusts, and the stateโs 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 Dakotaโs sophisticated statutory framework and common law. South Dakota trust law is codified within Title 55 of the South Dakota Codified Lawsโwith provisions regarding creation of trusts primarily found in Chapter 1.ย ย
South Dakota trustsโlike trusts in other statesโhave three essential parties: a trustor who funds the trust (many states use the synonym โsettlorโ), a trustee, and at least one beneficiary. The trustor creates the trust by placing confidence in the trusteeโoften by transferring control of property. The trustee manages and holds legal title to trust property. The beneficiary is the person designated to enjoy the benefits of the trust without holding legal title to trust property.ย
Trustees are considered fiduciaries and must administer trust assets in good faith and avoid self-dealing. A trustee of a South Dakota trust ordinarily has authority to manage trust assets byโfor exampleโinvesting, 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.
South Dakota allows for overlap between a trustโs parties. For example, a South Dakota trustโs trustor can also be the sole trustee and sole beneficiary during the trustorโs lifeโas long as the trust provides for a successor beneficiary after the trustorโs death.ย
South Dakotaโs trust laws authorize other optional roles that can be designated within a trust instrument. A โtrust protector,โ for instance, is empowered to enforce the terms of the trust, and a โtrust advisorโ consults with or instructs the trustee regarding investment of trust assets and distributions to beneficiaries.
A South Dakota trust can be either โexpressโ or โimplied.โ An express trust involves a trust relationship which the trustor intends to create and the trustee voluntarily accepts. Implied trusts are created by operation of law and circumstances under which one party holds property on behalf of another. This article deals with express trustsโwhich are used more often in estate planning.
To create a South Dakota express trust, a trustor must articulate an intent to create a trust through words or actions. The trusteeโs words or actions must, in turn, indicate the trusteeโs acceptance or acknowledgement of the trust. The words or actions of both trustor and trustee must indicate the trustโs 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.
A trustโs 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 and can expand, restrict, eliminate, or otherwise vary the default rules that ordinarily apply to South Dakota trusts or trust administration.
Trusts are either revocable or irrevocable. The trustor of a revocable trust retains the right to modify or terminate the trust. The trustor of an irrevocable trust 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.
South Dakotaโs laws regarding โspendthrift trustsโโwhich restrict transfer of beneficiariesโ interests in the trustโprovide powerful protections against creditors. A beneficiaryโs creditors cannot attach a beneficiaryโs interest in a South Dakota spendthrift trust until distributed to the beneficiaryโeven if the beneficiary is also trustee or has the power to replace or remove the trustee. A trustee can make direct payments of trust assets on a beneficiaryโs behalf without risk of attachment by creditors.
A spendthrift provision in a revocable trust does not ordinarily prevent the trustorโs creditors from attaching the trustorโs beneficial interest in the trust. A trustorโs beneficial interest in a South Dakota irrevocable spendthrift trust is protected from creditors under certain circumstancesโsuch as if the interest is contingent on the trustor surviving his or her spouse.
South Dakota is among the states with the strongest laws authorizing Domestic Asset Protection Trusts (DAPTs)โa form of spendthrift trust that provides exceptionally strong protections against creditors. DAPTs are irrevocable, self-settled (i.e., the trustor is also beneficiary), and designed for maximum asset protection.
Assets held in a South Dakota DAPT are nearly immune from attachment and cannot be reached to satisfy most types of debtsโexcluding 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.
The trustor of a DAPT can retain certain rights without invalidating the trust. Among other things, the trustor can reserve 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 trustorโs death (also subject to limitations), use real estate held in the trust, and appoint a new trustee.
South Dakota DAPTs must meet precise standards defined in the authorizing statute. A South Dakota DAPT must haveโfor instanceโa trustee resident in South Dakota, a trust instrument expressly incorporating South Dakota law, and a standard for distributions that does not give the trustor an unfettered right to trust principal.ย
South Dakota recognizes numerous other specialized forms of trustsโincluding trusts for the care of animals, charitable trusts, โpurpose trustsโ created to serve an identified purpose, and prearranged funeral trusts relating to prepaid final expenses.
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Estate Taxes: South Dakota does not impose either estate or inheritance taxes.ย Large South Dakota estates may still be liable for federal estate taxes.
Simplified Probate:ย 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 applicantโs 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.ย
South Dakota also allows a person entitled to possession of an estateโs personal property to collect the property using an executed affidavit. An interested person can recover personal property using an 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.ย Assets co-owned as joint tenants with a right of survivorship automatically transfer to a surviving owner upon the other ownerโs death.ย South Dakota does not recognize tenancy by the entiretiesโa form of co-ownership between spouses recognized in many other states.ย ย
POD (payable-on-death) and TOD (transfer-on-death) designations, which provide for automatic transfer to a beneficiary upon an ownerโs death, can also be used in South Dakota for many assets.ย For instance, POD designations can be added to financial accounts and CDs, and TOD designations can be used with assets like registered securities and brokerage accounts.ย ย
Similarly, some assetsโlike retirement accounts and life insuranceโallow owners to name a beneficiary who automatically takes ownership of the asset upon the original ownerโs death.
Transfer-on-Death (TOD) Deeds and Vehicle Titles:ย South Dakota is among the states that authorize transfer-on-death deeds for real estate (also called โTOD deedsโ or โbeneficiary deedsโ). Ownership of real property subject to a TOD deed automatically transfers to the named beneficiary upon the ownerโs death, avoiding the need for probate.ย South Dakota does not recognize TOD designations on vehicle titles.
Spousal Shares: To avoid spousal disinheritance, South Dakota law grants a surviving spouse a right to an elective share in the deceased spouseโs โaugmented estate,โ even if the decedentโs will provides differently.ย A surviving spouseโs elective share in the augmented estate ranges from three to fifty percent, depending on how long the couple was married.ย The augmented estate includes the decedentโs net probate estate, the value of certain non-probate transfers (e.g., property co-owned in joint tenancy or with a POD designation), and the value of the surviving spouseโs property.ย ย
South Dakota provides for a supplemental elective share up to $50,000 if the surviving spouseโs interest is less than $50,000. The spousal elective shareโwhich may be waived through a valid pre- or post-nuptial agreementโis in addition to any allowances and exemptions to which the surviving spouse is entitled.ย
If a South Dakota decedent is intestate, the surviving spouseโs intestate share is the entire estate unless the decedent leaves descendants who are not also descendants of the surviving spouse. If the deceased spouse has children who not the surviving spouseโs children, the surviving spouseโs intestate share is $100,000, plus one-half of the balance of the estate.
Creating a will or trust does not have to be difficult or intimidating.ย However, certain circumstancesโlike second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)โcan add a layer of complexity and result in unforeseen long-term consequences.ย Whenever any out-of-the-ordinary issues are present, itโs a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.
