The Trust Advisor: “As more wealthy families cross borders to protect assets, they choose to set up personal trusts in states other than their own to take advantage of favorable trust laws. According to recent data, 72 percent of U.S. households with more than $1 million in investment assets use trusts as a key component to their estate planning. The main reasons to cross borders are:
- Some states don’t tax assets held in a trust, while distributions might be taxable in your home state.
- Trust codes in some states seek to protect assets from lawsuits and creditors.
- Some states allow “dynasty trusts” which permit future generations to avoid estate taxes.”
The study divides the “good” states Tier 1 (Alaska, South Dakota, Nevada & Delaware), Tier 2 (Florida, New Hampshire & Wyoming) and Tier 3 (Colorado, Idaho, Ohio, Wisconsin & Utah).