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South DakotaSB 100101st South Dakota Legislature (2026)SenateWALLET

revise provisions related to trusts.

Sponsored By: Crabtree, Casey (Republican), Stevens, Mike (Republican)

Signed by Governor

Fiduciaries and Trusts

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Bill Overview

Analyzed Economic Effects

7 provisions identified: 3 benefits, 0 costs, 4 mixed.

Trust changes gain flexibility and safeguards

Trustees can move some or all discretionary trust income or principal into another trust, or change the original to create one. The trust document must not prohibit this, and trustees must consider both trusts’ purposes, terms, and consequences. They must find the move necessary or desirable. The new trust can serve only current or possible beneficiaries under the original trust’s distribution terms. Limits protect specified income interests, withdrawal rights, and distribution restrictions, and restrict certain trustees from benefiting themselves or increasing distributions. Covered gifts qualifying for the federal gift-tax exclusion for minors must keep the required date for ownership of remaining property. Changing the original trust requires at least 20 days’ advance written notice to qualified beneficiaries unless they waive notice in writing.

Trust transfers require filings, limit challenges

People transferring personal property to covered trusts must publicly file the bill of sale or other transfer document. Individual South Dakota residents file in their home county; others file where the trustee has a main residence or business. Creditors with claims arising after a transfer must challenge a fraudulent transfer within two years. Earlier claims generally have the same deadline. An earlier claimant can use the later of two years after transfer or six months after discovery only with an additional claim requirement. The creditor must show a specific claim asserted before transfer, or file another lawsuit within two years based on a pre-transfer act or omission. Relevant public filings establish discovery, and creditors must prove their case with clear and convincing evidence.

Rule-breaking trustees face removal and penalties

Trustees who violate the trust-law chapter can be removed and denied some or all compensation. A beneficiary, co-trustee, or successor trustee can treat the violation as a breach of trust. Trustees remain entitled to fees and expenses until a court orders compensation to stop.

Community property rules for spousal trusts

Effective January 1, 2026, South Dakota special spousal trusts are treated as community-property trusts for federal inherited-property tax-basis rules. The law defines special spousal property as community property. Property classified as community property elsewhere keeps that status while held in the trust. If the trust is revoked, that property keeps its status to the extent South Dakota law otherwise allows.

Trustees can pay owners’ tax bills

Beginning July 1, 2026, trustees can pay or reimburse income taxes tied to trust property for its federal tax owner. This covers trusts created, or whose main administration moves to South Dakota, on or after that date. The trust document must not expressly forbid reimbursement. The deciding trustee, advisor, or protector cannot be the owner or a related or subordinate party under federal tax law. Trustees can act at their own discretion or with a qualifying advisor’s or protector’s direction or consent. Payments cannot use life-insurance cash value or policy-loan proceeds, make the owner a state-law beneficiary, or reduce marital or charitable deductions. Using this authority is not a breach of trustee duty, and related fiduciary relationships remain confidential.

Trust lawyers’ duties and privacy clarified

A lawyer representing a trustee or other fiduciary does not owe duties to beneficiaries or other interested people by default. An express written agreement can create those duties. Lawyer-client communications remain privileged unless the fiduciary waives that protection. Paying the lawyer with trust or estate money, or a beneficiary’s right to accountings, does not change either rule. These rules do not end beneficiaries’ rights to accountings or other information.

Written rules govern later trust shares

Lifetime trust transfers count against a beneficiary’s later share only when the law’s written rules allow it. For revocable trusts, the creator must declare it in writing, the beneficiary must acknowledge it, or another writing must say it counts. For discretionary payments from irrevocable trusts, the trustee or distribution advisor must declare it in writing, or the beneficiary must acknowledge it. Alternatively, the trust terms must require equalization and counting those payments in later distributions. Property counted against a later share is valued when the beneficiary takes possession or starts enjoying it.

Sponsors & Cosponsors

Sponsors

  • Crabtree, Casey

    Republican • Senate

  • Stevens, Mike

    Republican • House

Cosponsors

  • Roby, Matt

    Republican • House

  • Schoenfish, Kyle

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 117 • No: 3

House vote • 2/26/2026

Do Pass

Yes: 64 • No: 2

House vote • 2/25/2026

Do Pass

Yes: 11 • No: 1

Senate vote • 2/4/2026

Do Pass

Yes: 34 • No: 0

Senate vote • 2/3/2026

Do Pass

Yes: 8 • No: 0

Actions Timeline

  1. Signed by the Governor

    3/10/2026Senate

  2. Delivered to the Governor

    3/4/2026Senate

  3. Signed by the Speaker

    3/3/2026House

  4. Signed by the President

    3/2/2026Senate

  5. Do Pass

    2/26/2026House

  6. Do Pass

    2/25/2026House

  7. Scheduled for hearing

    2/25/2026House

  8. Referred to

    2/9/2026House

  9. First Reading House

    2/5/2026House

  10. Do Pass

    2/4/2026Senate

  11. Certified uncontested, placed on consent

    2/3/2026Senate

  12. Do Pass

    2/3/2026Senate

  13. Scheduled for hearing

    2/3/2026Senate

  14. First read in Senate and referred to

    1/20/2026Senate

Bill Text

  • Introduced

    1/19/2026

    PDF

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