Is Sioux Falls becoming a ‘Dynasty Trust’ tax haven?

 

South Dakota has long been known as a tax haven for full-time, retired RVers. In fact this business is one of the leading mail forwarding businesses in the country. The other irony is that while ‘REAL’ residents are paying retail and property taxes to help support services in our state, these people are taking advantage of residency to skirt taxes (besides the pittance they pay in vehicle licensing).

But this article goes beyond the little tax loophole RVers are participating in;

Among the nation’s billionaires, one of the most sought-after pieces of real estate right now is a quiet storefront in Sioux Falls, South Dakota.

Don’t look for any heiresses in this former five-and-dime. Most days, the small offices that represent these families are shut. Even empty, they provide their owners with an important asset: a South Dakota address for their trust funds.

In the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn’t actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota’s tax-friendly trust laws.

Can you believe that? On the corner of 1oth & Phillips, where billions in dynasty trusts are sheltered from taxes you only have to walk a few blocks to the SAM bus station to see some of the poorest people of our community.

South Dakota’s sudden popularity illustrates how, at a time of rising U.S. economic inequality, the wealthiest Americans are embracing ever more creative ways to reduce taxes legally. Executives at South Dakota Trust Co., one of the biggest in the state, estimate that one-quarter of their business comes from special vehicles known as “dynasty trusts,” which are designed to avoid the federal estate tax. Creation of such trusts has surged in recent years as changes in federal law enabled more money to be placed in them.

Still others are drawn to South Dakota’s iron-clad secrecy, and protections of trust assets from creditors and ex-wives. Many of these features emulate those available in Bermuda and other island havens.

You ain’t kidding, secrecy. You can’t even get developers to release names of investors when they are asking for millions in TIF’s.

In South Dakota, a farm state that’s home to two of the 10 poorest counties in the U.S., lawmakers say they’re bolstering the trust industry to generate work for local law firms and bankers, and forge ties with prosperous families that may one day decide to build a factory or a warehouse here.

LMAO! How did that packing plant in Aberdeen work out? Or the cool million wasted in recruiting a couple of welders to SD for Trail King?

And our, conflict of interests, non-ethical legislature has no problem with robbing the federal government of tax dollars while holding out their hands for EB-5 programs;

The bill was sponsored by the House’s Committee on State Affairs, whose chairman, David Lust, is also House majority leader and head of the trust task force. When the part-time legislature isn’t in session, Lust works at a Rapid City law firm where one of his partners is a leading trust lawyer.

Lust receives no “direct benefit” from the legislation, he said.

Bernie Hunhoff, a Democrat and the House minority leader, said some in his caucus roll their eyes when the task force’s annual proposals come up for a vote. They’re aware that the trust industry drains revenue from the U.S. Treasury, which supplies almost half the state’s budget each year, he said.

“There’s a bit of an irony there, if not hypocrisy,” said Hunhoff, editor and publisher of South Dakota Magazine. “Anything we can do to poke the federal government in the eye, or to help anybody, even wealthy strangers from 1,000 miles away, avoid taxes, that seems to be a popular thing out here.”

Still, Hunhoff said the proposals have bipartisan — and virtually unanimous — support.

“If we don’t provide for these kinds of trusts here, this will happen in some other state, so we might as well try to get the activity here,” he said. “If we can find opportunity for a few dozen young lawyers, I guess I’ll set my philosophical concerns aside.”

Bernie? Hypocrisy in the South Dakota Legislature? Get the F’ck outta here!