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On Trusts: South Dakota Leads Globe Back to Feudalism

The rich have become richer, and the poor have become poorer.

Percy Bysshe Shelley’s compatriot reporter and author Oliver Bullough visited South Dakota last spring and found neither poets unacknowlegedly legislating nor even reasoners and mechanists innocently seeking durable, universal, and permanent good. Instead, in his rich write-up of our unfair state, Bullough finds South Dakota in thrall to promoters of utility for the rich alone, “undermining global attempts to control tax dodging, kleptocracy and money-laundering.”

A decade ago, South Dakotan trust companies held $57.3bn in assets. By the end of 2020, that total will have risen to $355.2bn. Those hundreds of billions of dollars are being regulated by a state with a population smaller than Norfolk, a part-time legislature heavily lobbied by trust lawyers, and an administration committed to welcoming as much of the world’s money as it can. US politicians like to boast that their country is the best place in the world to get rich, but South Dakota has become something else: the best place in the world to stay rich.

At the heart of South Dakota’s business success is a crucial but overlooked fact: globalisation is incomplete. In our modern financial system, money travels where its owners like, but laws are still made at a local level. So money inevitably flows to the places where governments offer the lowest taxes and the highest security. Anyone who can afford the legal fees to profit from this mismatch is able to keep wealth that the rest of us would lose, which helps to explain why – all over the world – the rich have become so much richer and the rest of us have not [Oliver Bullough, “The Great American Tax Haven: Wh the Super-Rich Love South Dakota,” UK Guardian, 2019.11.14].

Bullough notes that judges in Merrie Olde Engelande, recognized the pernicous effects of the elites’ hoarding and locking up wealth forever and intervened in the 17th century with the “rule against perpetuities” to keep wealth circulating through the entire economy. Remarkably good things ensued… only to be reversed by Bad King Bill of South Dakota:

That weakened aristocratic families, opened up the British economy, allowed new businessmen to elbow aside the entrenched powers in a way that did not happen elsewhere in Europe, and helped give the world the industrial revolution. “It’s a paradoxical point, but it wasn’t a bad thing when the scion of some family from out in the counties came down to London and pissed away his fortune. It was redistribution of wealth,” said Eric Kades, a law professor at William & Mary Law School in Virginia, who has studied trusts.

English emigrants took the rule to North America with them, and the dynamic recycling of wealth became even more frenetic in the land of the free. Then Governor Janklow came along. In 1983, he abolished the rule against perpetuities and, from that moment on, property placed in trust in South Dakota would stay there for ever. A rule created by English judges after centuries of consideration was erased by a law of just 19 words. Aristocracy was back in the game [Bullough, 2019.11.14].

Now South Dakota’s Legislature blindly breaks the world, uncomprehendingly voting for a return to feudalism:

…It last updated the law governing trusts in 2018, and brought in Terry Prendergast, a trust lawyer, to explain the significance of the changes. “People should be allowed to do with their property what they desire to do,” Prendergast explained. “Our entire regulatory scheme reflects that positive attitude and attracts people from around the world to look at South Dakota as a shining example of what trust law can become.”

There were a few questions from the representatives, but they were quickly shut down by Mike Stevens, a Republican lawyer, and chairman of the state’s judiciary committee. “No more questions. I didn’t understand perpetuities in law school, and I don’t want to understand it now,” he said, laughing.

…“The voters don’t have a clue what this means. They’ve never seen a feudal society, they don’t have a clue what they’re enabling,” [Senator Susan] Wismer said. “I don’t think there are 100 people in this state who understand the ramifications of what we’ve done” [Bullough, 2019.11.14].

It’s no wonder South Dakota’s leaders regularly denigrate Shelley’s poetical philosophers, not to mention inquisitive truthtellers like Oliver Bullough. South Dakota will brook no challenge to the feudalizing financiers who have taken over our state. Those hoarders have used our rural isolation and economic desperation to turn back centuries of striving toward some semblance of equality and opportunity and instead rebuild the walls that shield the laggardly rich from the ever-toiling subject masses.


  1. Porter Lansing 2019-11-30

    Senator Bernie Sanders and Senator Elizabeth Warren well understand South Dakota’s trust inequities. Every voting block except one supports a wealth tax. One group calls it “double taxation”. Guess who that group is. Rich, white, males.

  2. Donald Pay 2019-11-30

    Janklow had no idea what he was doing in much of anything that he proposed. He had a big mouth and a bullying demeanor, but little idea about how to pull South Dakota out of a collapsing agricultural economy and declining tourism during that time. He doubled down with the out-of-state wealthy and the corporate interests who told him to serve the rich and sell out the state. And that’s what he did with so many of his positions: the Garrisson Extention, the CENDAK irrigation project, the ETSI coal-slurry pipeline and Chem-Nuclear’s national nuclear waste dump. All of those were fought hard and beaten, because they were easy to understand by grassroots South Dakotans. But no one in South Dakota, certainly not Janklow, knew much about the financial gimmickry he was proposing . If anyone understood it, they didn’t speak up.

    To be fair, it was a time of real desperation in South Dakota, and while Janklow courted the out-of-state rich, he stuck it to some long-time in-state interests, which had not been paying their fair share. The Homestake Mine had to ante up more severance tax for a few years until they were able to lobby that away.

    I have some consternation that many of us who were battling Janklow on so many fronts missed this.

  3. Chris S. 2019-11-30

    I wish when Brits wrote about Our Fair State (and presumably others too), that they’d take time to get the details correct. I have no reason not to trust the writer’s expertise in his topic, but when the article sets the scene with incorrect details, it undermines confidence in the writer. The Falls of the Big Sioux River are quartzite, not granite; a picture of Bear Butte (I think that was the stock photo) is not the “Black Mountain Hills of South Dakota.” “Some decent bars downtown” is a remarkably patronizing way to describe downtown Sioux Falls.

    Again, these things aren’t the core of the article and in no way undermine its main arguments. But please, writers, make the extra effort to get things right, even if it’s in the “less important” parts where you’re painting a picture for the readers. Sloppiness in those throwaway details doesn’t inspire confidence in the rest of your writing. [end rant about the writer’s craft]

  4. Porter Lansing 2019-11-30

    Now somewhere in the Black Mountain Hills of Dakota
    There lived a young boy named Rocky Raccoon
    And one day his woman ran off with another guy
    Hit young Rocky in the eye
    Rocky didn’t like that
    He said, “I’m gonna get that boy”
    So one day he walked into town
    Booked himself a room in the local saloon

  5. happy camper 2019-11-30

    But if I remember right this is mostly just about the titling of these trusts. The actual management is done elsewhere so the number of South Dakota jobs this creates is minuscule by comparison. Contrast this to Janklow’s low usury rate which did create jobs and to a much lesser extent our easy citizenship that allows the registration of RVs and automobiles so retirees and mobile workers can avoid state income taxes. However it does fit with South Dakota’s Libertarian culture and we ain’t brinin em here with good weather.

  6. Buckobear 2019-11-30

    Like the old sayin’ goes: “Money is like manure, spread it around and it helps things grow. Left in a pile, it just stinks.”

  7. grudznick 2019-11-30

    Now, now, we should not jealously begrudge those fellows holding onto their own money. It is theirs, after all.

    For any of you overgodders out there: but if you have jealousy and selfish ambition in your hearts, do not boast and be false to the truth. For where jealousy and selfish grubbing exist, there will be disorder and vile practice.

  8. Porter Lansing 2019-11-30

    That’s shallow and selfish thinking, as usual from grudznick’s shallow and selfish attitude. ~Hiding money away from taxation, when little people like grudz and me work hard and pay our share to make America a safe and fair place to invest is immoral, improper, inequitable, and inexcusable in a state that claims to be innocent and incorruptible. It wouldn’t be their money without our contribution.

  9. Donald Pay 2019-11-30

    Interesting comment, happy camper. I think the libertarian philosophy applies more out in West River, than in East River, which had and still has a more communitarian philosophy. That explains more of the political differences between the east and west. I think East River has become less communitarian since Reagan. With respect to the usury issue, even Janklow came to realize there were downsides to the changes made to attract the big banks. It’s too bad there wasn’t something on the lines of an “economic impact statement” to figure out what the impacts of such changes could be. Back then people had no idea about the ramifications of what they were doing. Same thing with the deregulation of the thrifts at the federal level during the same time period. It ended up in a disaster. I think the trust issue is more slow-motion, but we’re headed for a similar disaster.

  10. happy camper 2019-11-30

    Yeah, they seem to simply think make the laws lose so we have the most attractive business climate which is reckless. Janklow made nasty executive cuts bypassing the legislature but possibly DSU would not be here in its current form he said Computer School or you’re done enrollment was at an all-time low we didn’t need all these normal schools. Citibank’s needs drove up enrollment one of their execs even became the college president for a short time (reportedly that didn’t work out well). Now look Cory just wrote on their (unlikely) success. Interestingly the family that donated the land for the college did not trust government the deed to the state was contingent on the school remaining a teacher’s college which they reminded the state in an attempt to help keep the school open. I did hear a few years back they signed off to remove that contingency at this point it would be extremely unlikely the state would ever want to close the school. Everything is going well except the kids do not know how to park and almost none of em bring a shovel. But there is a different perspective on the trust issue. This article claims we are getting some jobs and tax evasion is not the issue. Of course they’re selling the benefits (from article below):

    The state’s privacy laws at times have been misconstrued in the intent behind their secrecy, Joffe added.

    He gives an example of a client choosing not to disclose to a child at 18 that the child is the beneficiary of a large trust and waiting instead until a later age.

    “That can be a great way to stifle their ambition,” he said. “What’s unique about South Dakota is the silence of that. Whoever creates the trust can say kids don’t find out about the trust until they’re 35 and they’ve become functioning members of society. That’s a lot different from secrecy. It’s to protect the beneficiaries from themselves. There’s no tax evasion. It’s what people perceive as secrecy versus privacy.”

  11. Porter Lansing 2019-11-30

    There’s no tax evasion because the laws allow selfishness. There’s plenty of tax avoidance and tax manipulation because the people of South Dakota don’t look beyond their noses. Allowing the super wealthy to earn money rent free in America while the rest of us pay the price is a poor economic choice.

  12. mike from iowa 2019-11-30

    Poor bass poops are taxed too much, right? Korporate rates dropped even moar. And wingnuts don’t want these trust fund babies to pay a dime of estate taxes. They’d have to sell their gold teeth to pay the bills, right, Noem?

    Fortunately, wingnuts plan to save America’s wealth is to kick the poor off food stamps and free/reduced price school lunches.

    And one moar positive side, the CIA and 5G are nowhere to be seen in this atrocity.

  13. o 2019-11-30

    grudznick: “Now, now, we should not jealously begrudge those fellows holding onto their own money. It is theirs, after all.”

    As long as they paid the proper taxation on the earning of that money, I can be OK with that. However, once they pass that money on to another – even family member – I really do believe that becomes income for the person who inherits it and as such ought to be treated and taxed as income.

    Janklow’s motivation was jobs. The big banks promised an influx of good jobs to SD to steward over these funds. Although we did get the call centers for the collection agents of these usurer trappings, we did not so much get the top executive jobs. SD is not where the high finance players want to live, and as pointed out above, these funds can be manages from anywhere. This might be an example of how a race to the bottom is not one you necessarily want to win over the long term.

  14. John Dale 2019-11-30

    Inheritance is a strange phenomenon.

    Is anything less than the children creating the wealth themselves acceptable to a true capitalist?

    Why not use the money to ensure a free and fair market for your offspring to prove themselves?

    My working hypothesis is that pure inheritance wealth creates devolution.

    I see farm land being converted to cash as a strong signal I’m correct. It’s a cookie cutter business model that eats away at the hard asset (the land) that is converted to cash, which is then blown on stupid stuff.

    The cost to society is the farm land and the urban food supply that would otherwise come from it ..

    It’s a wicked shortcut.

  15. happy camper 2019-11-30

    But what other race are we going to win, other than to the bottom. I’m no Janklow fan, in fact he reminds me of Trump, a totalitarian type, but DSU ended up world class those call center jobs seemed fantastic back in the day. They spurred growth cause the jobs were here, but personal trust officers are usually in the same city, and top money managers are not coming to South Dakota. I don’t understand what type of admin they do here. Maybe all the taxes. Although Sioux Falls has really developed we don’t have the big city lifestyle most of these people are accustomed to the early Citibank execs mostly went home after the first winter.

  16. mike from iowa 2019-11-30

    Maybe they are like cafo owners, Happy, and do not wish to live with the stink they created.

  17. bearcreekbat 2019-11-30

    Repeal of the “rule against perpetuities” doesn’t provide a way for a wealthy living person to preserve his or her wealth during his or her lifetime. Rather, this “rule” simply placed a limit on the amount of control the holder of the wealth could exert after his or her death.

    The repeal of the “rule” enables a living holder of wealth to prohibit future spending or distributions of his or her legacy by will or trust by living beneficiaries. After repeal the holder now can tie up this wealth in perpetuity. The “rule” limited this ability to a period of “21 years after the lifetimes of those living at the time of creation of the interest,” i.e., the holder of the wealth and any then living beneficiaries. Without the rule the 21 year limit disappears and allow the holder to restrict futher wealth transfers forever. At least that is how I understand it to work. Others may disagree.

    Thus, leaving the rule in effect doesn’t necessary get the individual’s wealth back into the economy. Rather the “rule” simply empowers particular living beneficiaries to decide whether to spend or distribute an inheritance, by preventing the wealth holder’s ability to restrict spending or distribution by attempting to crteate an intest in the wealth for unlimited future potential generations.

    Likewise, repeal doesn’t necessarily avoid federal estate tax. There are other means to accomplish that goal.

  18. Debbo 2019-11-30

    This lavish wealth hoarding machine SD has created is responsible for many philanthropic organizations. You may say that’s a good thing, but Robert Reich makes an important point:

    “Foundations are an unaccountable, nontransparent, perpetual, and lavishly tax-advantaged exercise of power.”
    — Rob Reich, Stanford University

    Because those philanthropists own legislators on all levels, think Kochs in SD, they remove power from the people and end democratic self governing.

    Mike Allen in Axios has written a good article on philanthropy and what has happened to it, how it’s affecting the USA and where it’s most useful. There are plenty of useful links too.

    For instance, Jeff Bezos and Elon Musk say their giving is their space programs. Most Silicon Valley philanthropists direct their efforts to problems they can solve, like disease in Africa, not homelessness in the USA. Others give big $ to get buildings wearing their names at universities and hospitals.

    See where the gaping holes are? Yeah Americans in need. Much smaller charities and giving circles do their best to help locally, and it does, but such a small amount in comparison.

    Overall, SD’s coddling of the rich is helping the state very little and hurting it and the rest of our country much more.

  19. Porter Lansing 2019-11-30

    A trust is called a trust because you put money there and trust it will be safe until you remove it. Problem is this money is exempted from supporting the system which insures it’s safety. We contribute daily to the integrity of the country that provides the framework of freedom for trusts but the trusts don’t pay their own fair share. South Dakota allows this inequality and South Dakota is harmful to America because of that.

  20. grudznick 2019-11-30

    And there is why Mr. Lansing hates South Dakota. Because rich Colorado skiing bunnies keep their money here. Shame, Mr. Lansing. Shame.

  21. Porter Lansing 2019-11-30

    Grudzie’s shallow mind is perpetuating the myth that the billions being hidden in SD are mostly family trusts. Au contraire little goat turd. These are business trusts from around the world, owned by dictators who’ve stolen their citizens wealth and drug dealers who’ve stolen the lives of countless victims.
    *I do love to remind grudznick how much he loved to ski in CO when he went to college in Aspen, though. Hurtz, Donut?

  22. Britt Long 2019-11-30

    This might be the most important post you ever write. Of course the end of RAP was the end of any hope of a functioning democracy in a place like SD. Of course.

  23. happy camper 2019-11-30

    I’m failing to understand why this is so critical. I read the link, but BCBs interpretation seems correct, unless you’re saying Porter is right and a lot of corrupt money will be sanctioned by the state. What is RAP?

  24. Cory Allen Heidelberger Post author | 2019-11-30

    Hap, you are correct that the trusts are not generating a lot of jobs here. I would argue they aren’t creating any jobs: the lawyers involved here are just finding an easy way to cash in on out-of-state money instead of working harder for their money in court or handling farm estates. If we banned trusts, I wager not one job would disappear from this state.

  25. Cory Allen Heidelberger Post author | 2019-11-30

    Grudz, it’s their money as long as they live. Once they die, they no longer exist to make any claim of ownership.

  26. happy camper 2019-11-30

    But from this other article they do make it seem they are creating some jobs. They say SD Trust Company “acts as both its own trust company and provides space and services to private family trust companies that are required to have physical offices in the state.” Maybe they are just dummy offices or maybe they are doing some things. These are entities, so bills have to get paid for the estate, like any operating business, taxes prepared. I’m not getting just what they do here or mainly using our jurisdiction like corporations do with Delaware for legal benefits.

  27. Cory Allen Heidelberger Post author | 2019-11-30

    [By the way, this topic is too important to get off on sidetracks. If you’re not talking about the trusts issue, take your conversation elsewhere.]

  28. Cory Allen Heidelberger Post author | 2019-11-30

    That’s booster baloney, Hap. Absent trusts, those lawyers would just handle other contracts and cases, and their office staff would do other paperwork.

  29. Porter Lansing 2019-11-30

    Sorry, amigo.

  30. happy camper 2019-11-30

    I think you might be mistaken Cory. I googled “are south dakota trusts creating jobs” just to see what it would bring up. Job listings appeared, like the one below. A support position. Link to all jobs at the bottom.

    Trust Operations Specialist – this position provides advance-level support to Trust Administrative staff. The Trust Operations Specialist will assist 1-2 Trust Administration teams. Responsibilities include, but are not limited to, adding/removing trust holdings on the trust accounting system, scheduling payments, calculating amortization schedules, providing client statements, assisting with tax mailings and payments, and maintaining trust documentation.

    Bachelor’s degree or equivalent work experience in the area of accounting, business administration, finance, or related field is preferred. Prior trust operations experience desired, but not required. This professional must be a self-starter, who can work independently at a high level, and must be able to take initiative to ensure deadlines are met. Strong writing and verbal communication skills, time management, scheduling, organization, computer skills, office skills, along with contributing to a team effort, are…;jobs#htidocid=B8LPoi2Ig9Q4VDAgAAAAAA%3D%3D&sxsrf=ACYBGNT4gcmbe51ycej9w9tpETrH4Ck2bA:1575162839435&htivrt=jobs&fpstate=tldetail

  31. Ryan 2019-12-01

    Trust assets that earn income are taxed similarly to humans earning income, however they actually pay at the higher brackets with less income, so they aren’t dodging the income tax. Also, they are subject to the federal estate tax and the generation skipping transfer tax, which are quite substantial at 40%. Plus, all this is usually after the creator of the trust paid income tax on the money when it was earned originally. So the idea that trusts dodge taxes is untrue.

    As for jobs, most jobs related to trusts aren’t attorneys. South Dakota employs a lot of trust administrators, financial advisors, accountants, and all their staff to oversee trusts. These professional jobs help keep our state attractive to employees that would otherwise live and work elsewhere. The importance of that should not be overlooked, especially in a state with little else to offer for careers unrelated to agriculture.

    And as for the RAP (rule against perpetuities), that’s frankly not very important in any practical ways. Before the rule was repealed, a person could already control his wealth for more than 100 years after his death. Now he could, in theory, control it for longer, but most trusts that exist now will not exist in 50 or 100 years so the rule or lack of the rule is meaningless to 99.9% of trusts. Plus, it’s only been 30 something years since the rule was repealed, so there will be zero impact for another 70 plus years even for trusts that take advantage of that.

    If someone thinks south dakota should tax income to fund our society, that’s a reasonable conversation. If you want inheritance to be taxed as income, that’s at least somewhat reasonable. If you want “rich” people to give their money to poor people during life or at death, just say so (although it won’t help poor people in the long term and then the incentive to become financially successful is less attractive and the consequences for that would be catastrophic). But none of these arguments are really about trusts or the RAP at all.

    The feudalism comments are silly. Our legislators didn’t “break the world” via trust laws haha. Much ado about nothing.

  32. Jerry Hoekstra 2019-12-01

    My introduction to “trusts” came when the man I was working for said the only reason for using them is because that is what the Rockerfellers and the Kennedy’s use. I was a little miffed to hear this because I have a diplma from one of the snootyist state business colleges on the planet.

    The families who set up the “income tax” already had their assets in nonstatutory irevocabable trusts. Nothing the corporate fiction called “United States” does has jurisdiction over these ancient trusts. The Roman Law of Trusts

    So what are those of us caught behind enemy lines to do? quoting the “darling of the intellectual left,” Susan Sontag: “The white race is the cancer of humanity.”

    A trust is a private contract and the right to contract is theorectically the only right(pre-14th Amendment) wich our masonic Constitution does not interferr with.

    I am still advocating token resistance by the dormant — States united of America (the several States) — during this Zionist occupation we find ourselve in bondage to.


    I assume the Clinton foundation simply does not fall under the jurisdiction of the corporate fictions that are posing as our government.
    “Foundations are an unaccountable, nontransparent, perpetual, and lavishly tax-advantaged exercise of power.”
    — Rob Reich, Stanford University
    The Post Office predates the masonic constitution and seems to be able to seperate phony paper from legitimate trusts.

  33. Cory Allen Heidelberger Post author | 2019-12-02

    Good grief, some kooks just can’t stay on topic. Put a sock in it, Jerry Hoekstra. You’re a hate-filled conspiracy theorist completely detached from reality. Your comments offer no useful information for the public good.

  34. Donald Pay 2019-12-02

    I have a shirttail relative in the trust racket, so I know there are a few jobs associated with it. Are those few jobs worth the harm to society done by sequestering wealth in this way? It would be nice to have an economic impact statement done on this issue. Maybe there is some analysis of this done by some enterprising economist.

    I never had enough wealth to even think about such things as trusts. For most of my life in South Dakota I lived paycheck-to-paycheck, sometimes falling behind on payments for medical bills and student loans. We spend a lot of effort protecting people with immense wealth, and that effort seems to provide a few crumbs that drop off the table to the dirt floor so that some Trust Operations Specialist can get a non-living wage to barely scrape by, just like I had to. A few starvation wage jobs seems to satisfy the political class that serving the wealthy is what they need to do.

    Once I moved away from South Dakota, I finally made enough money that I could invest something for my dotage. I’m hoping to not outlive my “wealth” so I can give a few dollars to my progeny, who grew up poor in South Dakota. I can state, though, that I never stooped so low as to lap up the crumbs from the oligarchs table.

  35. Donald Pay 2019-12-02

    I found this very interesting piece on perpetual trusts. It talks a bit about the history in England and France, why perpetual trusts were abolished, the likely injury done by perpetual trusts to heirs and society of creating a perpetual leisure class, the economic damage caused by failure of perpetual trusts to take entrepreneurial risks, etc. Lots to think about here. Other states call these trusts,”dynasty trusts,” which more accurately describes their oligarchic nature

  36. David Bergan 2019-12-05

    Hi Ryan,

    Would you be in favor of the United States joining the Common Reporting Standard (CRS) with the other countries?

    Kind regards,

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