Understanding the tax implications of the state where you reside is important for estate planning. Like any other state, Oklahoma offers benefits and disadvantages when it comes to tax structure. For those who are creating trusts to protect wealth for later in life or to pass money on to loved ones, other states may also hold value.
Some of the country's wealthiest organizations and individuals are taking advantage of trust shelters across state lines. Several states levy very little to no taxes on inheritances or investments, which allows individuals to save a sizable percentage when passing money on to others. Because trusts can be created outside of the home state, a growing number of people are moving money into legal structures set up in numerous states.
One state with a strong draw for the wealthy is South Dakota. In fact, an old five-and-dime store in one city in that state is drawing a number of high-profile names. Billionaire families have leased office space in the building, but no one's really taking up residence.
The only thing required to set up a trust in the state is an address. The state also provides strong confidentiality for trusts and allows a greater level of individual control than is offered in some locations. All of these benefits combine to make the state a front runner for trust set-ups.
Even families who are not numbered among the nation's wealthiest should consider the benefits of trust administration in different locations. Even if you won't be moving your money across state lines, considering what laws and taxes will do to your future investments is a good idea. You and your heirs should understand the costs of your wealth, regardless of how large that wealth might be.
Source: BloombergBusinessweek, "South Dakota, Little Tax Haven on the Prairie" Zachary R. Mider, Jan. 09, 2014