McKonly & Asbury’s Collaborate 2014 Conference featured various presentations focused on timely and relevant business, planning, and tax issues facing business owners and leaders from across the Central PA region. This presentation was given by David Warren, President and CEO of Bridgeford Trust Company, and Dan Matarrese, CPA and Tax Senior Manager with McKonly & Asbury. It focuses on the vital importance of selecting the proper trust jurisdiction and why it is an important matter in the planning process as it pertains to asset protection, tax mitigation, and privacy. The session was highly interactive and highlighted the fact that not all states are “created equal” relative to trust laws and, therefore, considering alternative trust jurisdictions is as an important a consideration as the decision to create a trust in the wealth planning process. View a full recap of this event at http://www.macpas.com/recap-mckonly-asburys-collaborate-2014-conference/

1. David Warren, President/CEO
Bridgeford Trust Company
Daniel Matarrese, Tax Senior Manager
McKonly & Asbury
A Comprehensive Look at the
Wealth Transfer, Protection,
and Enhancement Benefits of a
South Dakota Trust

2. “The choice of a state in
which to establish a trust
is as critical as the
decision to create one.”
Elizabeth Mathieu,
President of Neuberger & Berman

3. • Trust laws vary significantly from state to state.
• A few states are “in a race” to establish the most
progressive laws in an attempt to capture trust
business.
• Tier 1 Trust Jurisdictions*
o South Dakota
o Delaware
o Nevada
o Alaska
Introduction
* Trusts & Estates Magazine, January 2014 Issue

4. • Asset Protection
• Taxation
• Privacy Rules
• Rule Against Perpetuities
• Modern Trust Laws
What are the Factors Considered
When Determining Top Tier
Trust Jurisdictions?

5. • Hot topic over the past 10 years and it is not going away.
• Very compelling planning tool for high risk individuals
and pre-marital planning.
• Only a few states allow for self-settled asset protection
trusts including South Dakota and Delaware.
• Fraudulent conveyance (look-back):
o South Dakota – 2 years.
o Delaware – 4 years.
• NO asset protection statute in Pennsylvania.
Asset Protection

6. • Self Settled Trust that protects assets from
creditors (including future spouse).
• Strategy that legally shields assets from third
party liability (future spouse) while permitting
settlors to retain some control over trust assets
AND enjoy a discretionary beneficiary interest
during their life time.
• Pennsylvania does NOT have an Asset
Protection Trust Statute.
What is a Domestic Asset
Protection Trust?

7. • 14 States have passed Asset Protection Statutes.
• South Dakota, Nevada, Alaska, and Delaware
are consistently recognized as having the most
robust and powerful Asset Protection Statutes
in the nation. *
Asset Protection States
* See Domestic Asset Protection Trusts: Which Jurisdictions Are the Most
Effective to Set Up This Powerful Tool?
Mark Metric & Daniel G. Worthington, Trust and Estates Magazine, January 2013

8. • Taxation of Trust Assets
• Fraudulent Conveyance/Statute of Limitations
• Spouse/Child Support Exception
• Privacy Provisions
Factors that Determine the
Best Asset Protection States

9. • Very important issue to consider and disclose to
clients, particularly for perpetual or dynasty trusts.
• Trusts are taxed in most states, including
Pennsylvania.
• A few states do not tax trusts, including South
Dakota and Delaware.
o McNeil v. Commonwealth of Pennsylvania,
Pennsylvania Commonwealth Department of Revenue
Taxation

10. • Very important issue for high net worth
families and closely held business owners.
• South Dakota – Total Seal Forever.
• Delaware – Seal for 3 years then Open to
Public.
• Pennsylvania – Open to Public.
Trust Matter Privacy

11. • Definition – A trust that is not subject to the
rule against perpetuities/lives forever.
• Driven by State Law.
• South Dakota law allowed for the first Dynasty
Trust in 1983 by abolishing the rule against
perpetuities.
• Pennsylvania Abolished in 2007
(not retroactive).
Dynasty Trust

12. • Directed Trusts vs. Delegated Trusts
• Trust Protector
• Reformation and Decanting
• Control
Modern Trust Laws

13. The Vital Importance of Choosing
the Correct Trust Jurisdiction

14. David Warren, President/CEO
Bridgeford Trust Company
dwarren@bridgefordtrust.com
Daniel Matarrese, Tax Senior Manager
McKonly & Asbury
dmatarrese@macpas.com
Questions?