A living trust can help you establish a solid estate plan and protect your assets after death. Every state has different estate and inheritance laws, but this guide will take a closer look at how to form a living trust in South Dakota and whether you need one.
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How to Create a Living Trust in South Dakota
Forming a living trust in The Mount Rushmore State requires a number of steps. Here’s what you’ll need to do:
A living trust is a legal arrangement that lets you transfer control of your estate to a trustee, who then distributes your property to any beneficiaries you’ve named. The trust goes into effect as soon as you create it, and it gives you the authority to decide at what age or date your beneficiaries will receive your assets.
There are also two types of living trusts. These are revocable living trusts and irrevocable living trusts. Revocable trusts allow the trust creator, or grantor, to modify or revoke the provisions in the trust without the approval of the trust’s beneficiaries. Irrevocable trusts cannot be altered or terminated by the grantor unless all of the beneficiaries approve.How Much Does It Cost to Create a Living Trust in South Dakota?
You’ll have a couple of options for creating a living trust in South Dakota, but the method you choose will affect how much you spend. If you’d rather create the trust yourself, you’ll spend up to a few hundred dollars, but DIY estate planning also presents some risks.
The other option is to hire an attorney who specializes in living trusts. This method is more expensive, and you may spend at least $1,000 depending on your attorney’s fees. This could be the safer route if you’re not comfortable with creating the trust document on your own.Why Get a Living Trust in South Dakota?
People often use living trusts to avoid probate. Probate is a process where court officials approve a will’s provisions. The probate process can be expensive and take many months, but South Dakota uses something called the Uniform Probate Code. This code simplifies the probate process, allowing you to save time and money. Additionally, South Dakota offers an even simpler probate process for those with estates smaller than $50,000.
South Dakota also has a law regarding the spouse of a deceased person. The law gives the surviving spouse the “right of election” to take a certain percentage of the decedent’s estate, even if the spouse isn’t a beneficiary.Who Should Get a Living Trust in South Dakota?
You don’t need to have the largest estate to create a living trust. If you’d prefer this over the probate process, you might not save as much money, and some of your assets would still be subject to South Dakota’s right of election.
You should also consider using the probate process. South Dakota’s Uniform Probate Code greatly streamlines the process, and it’ll be even easier for those with estates under $50,000.Living Trusts vs. Wills
Even if you’ve already formed a living trust, you can still benefit from incorporating a will into your estate plan. If there are any assets you didn’t include in your trust, you can assign them to a will. This gives you more flexibility with distributing your assets after death. Wills also allow you to perform actions that trusts cannot. These include:
The following chart highlights some similarities and differences between a living trust and a will:Living Trusts vs. Wills Living Trusts Wills Names a property beneficiary Yes Yes Allows revisions to be made Depends on type Yes Avoids probate court Yes No Requires a notary Yes No Names guardians for children No Yes Names an executor No Yes Requires witnesses No Yes Living Trusts and Taxes in South Dakota
Taxes generally won’t affect your living trust, but you should still take note of South Dakota’s estate tax and inheritance tax laws. South Dakota doesn’t have an inheritance or estate tax, but a federal estate tax applies to estates worth more than $11.4 million for individuals and $22.8 million for married couples filing jointly.
If you’re estate exceeds the federal threshold, you’ll have to pay estate taxes even if you don’t use a living trust.The Bottom Line
South Dakota uses the Uniform Probate Code, so it may be better to use the probate process instead of a living trust. If you prefer a living trust, an attorney can help you create the document, although hiring an attorney will cost more than doing it yourself. No matter which route you take for estate planning, remember that South Dakota grants a surviving spouse the right of election. Whether you decide to use a living trust or a will, your spouse will inherit a percentage of your assets following your death.Estate Planning Tips
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