South Dakota abolishes Rule Against Perpetuities, enabling dynasty trusts and tax haven status

South Dakota became the first U.S. state to abolish the common-law Rule Against Perpetuities, ending centuries of legal precedent designed to prevent families from holding wealth in trusts forever. The legislature enacted SDCL Section 43-5-8 declaring “The common-law rule against perpetuities is not in force in this state,” enabling creation of true dynasty trusts lasting in perpetuity without forced distributions. Combined with South Dakota’s lack of state income tax, capital gains tax, or estate tax, these perpetual trusts allow wealthy families to indefinitely avoid both state income taxation and federal estate and gift taxation. The law provided robust privacy protections requiring courts to seal trust filings in perpetuity (SDCL Section 21-22-28), and imposed no residency requirements for trust creators. Over subsequent decades, other states copied South Dakota’s model, but South Dakota remained uniquely attractive as the only perpetual-trust jurisdiction with zero taxation on trust assets. By 2019, South Dakota housed over $360 billion in trust assets managed by 62 publicly-chartered trust companies, yet generated only $1.5 million in examination fees and charter revenue from $2.2 billion in total state revenues. The transformation demonstrates how a rural state legislature systematically dismantled wealth taxation and financial transparency to attract global capital, with minimal economic benefit to state residents while enabling dynastic wealth accumulation and tax avoidance by domestic and international elites.