Chief Justice David Gilbertson’s State of the Judiciary Address detoured to a State of the Fiduciary, as he said South Dakota has more money deposited in trusts than any other state in the nation:
To some, South Dakota is a “fly-over” state. That erroneous perception, however, does not apply to the world of trusts. The significant expansion of trusts is due to the foresight of governors beginning with Governor Janklow and Legislatures that enacted laws attractive to moving trust assets into South Dakota. The combination of no personal state income tax, no corporate income tax, no inheritance tax, and no rule against perpetuities has produced stunning results.
South Dakota now has 100 trust companies that maintain a physical presence in our state. According to the FDIC, 3.2 trillion dollars is invested in trusts in South Dakota. South Dakota is the number one state in the nation in the amount of trust deposits. While many people find a way to “fly-over” South Dakota, their dollars find a way to land here. With this significant growth, the Supreme Court anticipates its trust docket will continue to grow [Chief Justice David Gilbertson, State of the Judiciary Address, as recorded in the Senate Journal, 2019.01.09].
$3.2 trillion?!
- That’s 13.7 times more than then-Representative/now-Senator Susan Wismer (D-1/Britton) said was in 94 trusts in South Dakota last year.
- If South Dakota got on a plane and ran away with that money, we could divvy it up and each get $3.7 million.
- If the Legislature charged those trusts an annual fee of 0.05%—that’s half a penny on every ten dollars socked away in South Dakota—as a convenience fee for helping those nice rich people dodge taxes, we’d take in $1.6 billion a year… or 95% of the entire state general fund Governor Dennis Daugaard recommended on his way out the door.
Now maybe I shouldn’t get too excited: in her State of the State Address yesterday, Governor Kristi Noem referred to “$3.1 trillion in bank assets—more than any other state in the country. Our trust industry oversees billions more….” So maybe Justice Gilbertson got his spreadsheet lines crossed (Dammit, Jim, I’m a justice, not an accountant!).
But according to the chiefs of our Executive and Judicial branches, South Dakota is sitting on $3.2 trillion of mostly other people’s money.
If you hand me personally $3.7 million, say, “Here, keep this safe for me,” and then tell everyone, “Hey! Cory’s got $3.7 million in his pocket!” I’m going to ask for a small fee for my guard duty. 0.05% of your stash in my house would be about $1,800, enough to buy myself a big heavy safe that nobody’s going to blow open, burn down, or haul away with their white pickup truck.
Governor Noem, your Next Big Thing is already here. We’re sitting on it and not getting paid for keeping all those nest eggs safe. You said “We won’t raise taxes,” and we don’t have to. 0.05% on those trusts and other high-roller assets isn’t a tax; it’s a convenience fee.
I like the cut and run option best. I’ll take mine in a suitcase with wheels, please.
That would certainly pay for Ivanka’s (oops Kennedy) wedding. eh ?
Why do you suppose Kristie said: “several billion in trust, and a trillion more in ag assets”? What are she, Lust and the rest of the wrecking crew hidingg?
Is the tax haven industrySouth Dakota’s largest?
The passenger rail system that is a key part of my reconciliation plan with natives is funded entirely by several sources, one is a 3 year leveraging our gargantuan trust market.
Whoa. That’s a lot of moola!
Find out what the next state in the rankings charges. Stay comfortably under that and make some dough for SoDak.
No brainer, so the SDGOP is unlikely to touch it.
One is able to buy a lot of governors and legislators with that kind of money.
South Dakota doesn’t need more revenue.
That light train for the reservations is a great idea! It could be funded with the sales of CBD with growth and production done locally. That would be a great for employment and for a strong revenue stream. The light train could service not only the industry, but the rest of the population as well!
South Dakota doesn’t need more Jason one-liners.
When Governor Janklow made the moves to bring more banking to SD, he (and the legislature) had to make SD as “friendly” to banking as possible: repeal usurer laws, ensure an environment as tax-free as possible . . . The reward for this all was jobs, direct finance jobs and associated jobs in construction and other multipliers. I want to say Maryland charted a similar path. I also think those jobs faded over time – we kept the collection callers and the managers faded back to the cities of finance (but I am open to be fact-checked on that claim). Assets have grown, but at a rate FAR faster than the benefits to the state have.
I understand there is a tipping point where those banks cut and run to other locations, but I don’t think we are ANYWHERE close to that point. Certainly there is a marital fee for the wonderful environment SD offers for those who hold these $3B+ assets to continue to avail themselves.
BUT, if we go for the $3.7M divvy-up plan, put me down as a yes for a family of four!
The Chief Justice is incorrect.
Total state-chartered trust company assets are about $300 billion.
He quoted the entire FDIC-insured bank DEPOSITS, not trust assets. This includes ALL of Wells Fargo, and Citi, which both have their charters located in South Dakota.
South Dakota’s not going to get any money from the trusts. The company that built the safe in the bank doesn’t get a cut of everything that’s inside. If some cyber crook steals all the trust assets, SD’s not on the hook for the losses so they don’t have a right to any of the profits. No risk. No reward.
For once Porter is right. Jason is also, even if it’s a one-liner.
Steve, how did you and Jason come to the conclusion that there are no unmet needs of value in SD?
South Dakota sold it’s honesty rating to recruit these trusts. Wonder why SD is rated in the top five most corrupt states? The laws passed to entice the trusts is a big reason. The state is like a desert isle where pirates and ne’er do wells come to secretly bury their treasure. Once it’s sufficiently laundered, it’s dug up and moved to a more liquid storage unit. Wonder why Maria Butina hooked up with the repulsive Paul Erickson? Wonder why she had shell corporations in SD? Wonder why we haven’t heard diddly squat from the NRA, lately? The answers can be found in the laws passed to attract this $3 trillion in dirty money from around the world.
Porter, I see your safe construction analogy, but in a state where I am taxes because I live here, farm here, and/or do business here through property taxes, is it unreasonable for the state to also ask a fee for those who bank here – given that SD has done so much to make that banking so profitable?
Leslie, tax havens aren’t our biggest industry by jobs, because the trust lawyers want to keep that market cornered for themselves. Besides, it probably doesn’t take that many lawyers to sign the papers and rake in the bit commissions.
Jason, who said more revenue? Apply the 0.05% annual convenience fee to every dollar held in SD trusts and banks, and eliminate the state sales tax, contractor’s excise tax, telecom tax, video lottery….
A 0.05% Bermuda convenience fee could allow us to fund 95% of state operations and leave 95% of South Dakotans paying zero state tax.
O – I see your point. “Is it unreasonable for the state to also ask a fee for those who bank here – given that SD has done so much to make that banking so profitable?”
If there was authentic, touchable money involved, then yes. Trust accounts are actually banking on the internet, not in SD. Trust accounts are only using SD for it’s non disclosure laws not it’s storage space, security or safety. The issuers of the trusts are providing their own cyber security which justifies part of their fees.
For grudzie … Just try and pass a law taxing the trusts and SD’s sympathy towards lobbyist’s gifts will get national attention. There would be virtual hoards of lobbyists from all over USA coming bearing bribes to stop the taxation plan. As I understand it, there’s no limits on gifts from these Professor Hill’s.
I admit I sound really negativity biased on the issue of taxing the trusts. I hate negativity bias. I’ll concede. It’s worth a try. Won’t cost much. If the Fulton Fool can copy and paste stuff to write a resolution or a bill, how much time and money would it take? For one benefit, the publicity would be positive for a pile of money that doesn’t increase the voter’s taxes. Nobody likes billionaire banks and asking for “another bowl of porridge” would have good visual appeal. Might as well try it. Who knows?
Ryan the liberal defender of trusts : should we trust SCOSD or T’s hearsay? Is SD not becoming a tax haven? Why?
Laurie Walsh just continued the line “$3 T trust” industry this afternoon in her interview with the Chief. He also called Janklow “brilliant” ending the rule in perpetuity. He also didn’t mention lawyers are forced to take criminal appointments comparing against MDs who have been getting tuition forgiveness for decades.
Cory said, “tax havens aren’t our biggest industry by jobs, because the trust lawyers want to keep that market cornered for themselves.”
I don’t know by the numbers, but I would guess that there are many times more trust department jobs than lawyer jobs related to trusts. The lawyers write the documents and get paid, but the trust departments make the big money administering the trusts over time.
See the attached link:
https://www.bloomberg.com/news/articles/2019-01-15/four-chinese-tycoons-just-transferred-17-billion-to-trusts
Update: T is quite right, and the Chief Justice was quite wrong. According to the Division of Banking, as charted in a presentation to the South Dakota Banking Commission on August 27, 2020, 103 South Dakota trust companies held around $370 billion in assets in 2019.