The Swier Law Firm Estate Planning and Probate Law FAQs

In South Dakota, a beneficiary-controlled trust can provide future beneficiaries with access to both their inheritance and protection from future creditors. A beneficiary-controlled trust can accomplish all of the following:

• Reduce or eliminate federal transfer taxes (gift tax, estate tax, generation skipping tax)
• Keep family assets in the family
• Protect assets from various creditors (lawsuits, tax liens, divorce, etc.)
• Permit retention of control over the management of assets
• Permit you to dictate the eventual beneficiaries of the assets
• Allow for the retention of flexibility if circumstances or goals change

In South Dakota, property that is transferred into a living trust before death doesn't go through the probate process.

The successor trustee -- the person named to manage the trust after the grantor's death -- simply transfers ownership to the beneficiaries named in the trust. 

No, South Dakota does not have an inheritance tax. The voters of South Dakota repealed the state inheritance tax effective July 1, 2001.

However, you should be aware that a person may be liable for state inheritance taxes imposed by another state if the person (1) changes their residency to a state with an inheritance tax prior to death; or (2) passes away owning real property in a state with an inheritance tax. 

In South Dakota, a total return unitrust (or TRU) is a trust in which the income beneficiary is entitled each year to a percentage of the net fair market value of the trust assets. The value of those assets would be calculated on the same day of each year.

Unfortunately, many people incorrectly believe that transfering an asset to a revocable trust will result in Medicaid qualification. However, assets held in a revocable trust are still treated as still being owned by the individual for purposes of Medicaid eligibility.

The reason these transfers do not help with Medicaid eligibility is because the person still controls the asset in a revocable trust, either by keeping the right to revoke the trust or by retaining the power to control the disposition of the assets.

No!

If you haven't recently reviewed your beneficiary designations for your retirement account, you may find that your designated beneficiaries are not who or what you think it should be. This is especially true if you have recently divorced, remarried, or had children since your retirement plan was started. And while many of us make sure that important documents, like our wills, are frequently updated, we tend to "forget" about our retirement account beneficiary designations.

Remember - your retirement accounts are not part of your estate and usually are not governed by the provisions of your will, so it is important to keep those retirement accounts updated!

In a South Dakota "per stirpes" distribution, a group represents a deceased ancestor. The group takes the proportional share to which the deceased ancestor would have been entitled if still living.

For instance, presume your father named you and your brother as his primary beneficiaries. Your father left you 70% of his assets while your brother's share is 30%. If you brother dies before your father, your brother's share would go to his heirs (likely his children) upon your father's death.

The most common type of charitable trust is a "charitable remainder trust."  Here are the steps usually followed to create one of these potentially-valuable trusts. 

First, you establish a trust and transfer the property you want to donate to a charity. Please note that the charity must be approved by the IRS (which usually requires tax-exempt status under the Internal Revenue Code).

Second, the charity serves as trustee of the trust and manages the property so it will produce income for you. The charity then pays you (or your named beneficiary) a portion of the income generated by the trust property for a certain number of years.

Finally, at your death (or at the end of the period you designate) the property goes to the charity.

In South Dakota, a "charitable trust" allows you to donate to a charity.  At the same time, a "charitable trust" can give you and your heirs a significant tax break.

Establishing a "charitable trust" requires serious thinking because this trust requires that you give up legal control of your property.  Also, charitable trusts are irrevocable - in other words, once the trust becomes operational, you cannot change your mind and regain legal control of the trust property.

Under South Dakota law, there are a variety of ways to title property. Title is the method in which property is owned. How property is titled impacts the drafting of your estate plan. In South Dakota, title is commonly held in three different ways: sole ownership, tenancy in common, and joint tenancy.

In a joint tenancy, two or more persons own the same property with their right of ownership subject to the other joint tenant’s ownership right. When one joint tenant passes away their interest in the property automatically is transferred to the surviving joint tenant. This is the common ownership form among married couples, and couples often do this to their property to avoid probate. However,  when placing property in joint tenancy one must be cautious and contemplate the pros and cons of such an action because a joint tenant cannot leave their interest in the property to someone through their will.