A Minnesota Trust Can Now Run 500 Years. What South Dakota Still Has That Minnesota Does Not Is a Shorter List Than the Pitch.

The pitch, and the four things it is actually about

Someone who has built real wealth in Minnesota gets told, sooner or later, to set up a trust in South Dakota. The recommendation compresses four separate questions into one:

1. Can a person create a trust for their own benefit and keep their own future creditors out of it — a self-settled trust?
2. How long can a trust run before the law makes it end?
3. Does the state tax the trust’s own accumulated income?
4. Can roles be split — investment decisions to one person, distributions to another, a protector over both — and can the terms be changed later?

Three of those four used to distinguish Minnesota sharply. One of the three stopped distinguishing it on August 1, 2025, and most material written before that date has not caught up.

Minnesota will not protect a trust from the person who created it

Minn. Stat. § 501C.0505 opens by taking the spendthrift clause out of the analysis, then states the rule:

Whether or not the terms of a trust contain a spendthrift provision, the following rules apply:

(1) During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors.

(2) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor’s interest in the portion of the trust attributable to that settlor’s contribution.

The measure in clause (2) is the maximum amount that can be distributed, not the amount actually distributed and not the amount a trustee is willing to distribute. A discretionary standard that permits distributions to the settlor for any purpose exposes the whole trust to the settlor’s creditors, even if no distribution has ever been made.

Minnesota’s spendthrift protection runs the other way. Minn. Stat. § 501C.0502, paragraph (d) protects a beneficiary’s interest from a beneficiary’s creditors: “a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before its receipt by the beneficiary.” A parent’s trust for a child gets that. The person who created and funded the trust does not.

Five states that do have one, and what each requires

The marquee jurisdictions do authorize what Minnesota does not. Here is what each one actually demands, because the requirements are the part that gets left out.

South Dakota. SDCL 55-16-1(6) defines a “qualified disposition” as a transfer “to a qualified person or qualified persons, without consideration or for less than fair market value, by means of a trust instrument.” A qualified person under SDCL 55-16-3 must satisfy SDCL 55-3-41, which allows only an individual who genuinely resides and is domiciled in South Dakota, a trust company organized under South Dakota or federal law with its principal place of business in the state, or a South Dakota bank or savings association with trust powers and FDIC-insured deposits. SDCL 55-16-9 then bars any action against qualified-disposition property “unless the settlor’s transfer of property was made with the intent to defraud that specific creditor,” and SDCL 55-16-10 (2026) puts a clock on even that claim. The clock runs differently depending on when the creditor arose. A creditor who already existed when the assets went into the trust must sue within the later of two years after the transfer, or six months after the transfer was or reasonably could have been discovered — the six-month branch being open to a creditor who can show it asserted a specific claim against the settlor before the transfer, or who filed another action on pre-transfer conduct within two years of the transfer. Because the statute takes the later of the two, the discovery branch can push exposure past the two-year mark rather than cutting it short. A creditor who arose after the transfer has two years from the transfer. In either case the burden is on the creditor to prove the matter “by clear and convincing evidence.”

Nevada. NRS 166.040(1)(b) permits a spendthrift trust for the settlor if the writing “is irrevocable, does not require that any part of the income or principal of the trust be distributed to the settlor, and was not intended to hinder, delay or defraud known creditors.” NRS 166.015(2) requires that where the settlor is a beneficiary, at least one trustee must be a Nevada-domiciled individual, a trust company maintaining a Nevada office, or a bank with trust powers maintaining a Nevada office. NRS 166.170(1) builds the same structure and says so on the face of the statute: a person who was already a creditor when the transfer was made must commence an action within two years after the transfer or six months after discovering it, “whichever is later,” and a person who became a creditor after the transfer has two years from the transfer. NRS 166.170(3) requires proof “by clear and convincing evidence.”

Delaware. 12 Del. C. § 3570(7) defines a qualified disposition as one to trustees “at least 1 of which is a qualified trustee,” and § 3570(8) defines that term: a Delaware-resident individual other than the transferor, or an entity authorized to act as trustee in Delaware and supervised by the Bank Commissioner, the FDIC, or the Comptroller of the Currency — which in either case maintains custody or records in Delaware, prepares fiduciary returns, or otherwise materially participates in administration. Section 3572(b)(2) gives a post-transfer creditor four years, and the section places the burden on the creditor by clear and convincing evidence. Under § 3572(a) the Court of Chancery has exclusive jurisdiction over an action brought with respect to a qualified disposition.

Alaska. AS 13.36.035(c) provides that an Alaska governing-law and jurisdiction provision “is valid, effective, and conclusive for the trust if” four things are true: some or all of the trust assets are “deposited in this state” and administered by a qualified person; a qualified person serves as trustee; that trustee’s powers include maintaining records and preparing or arranging the trust’s income tax return; and “part or all of the administration occurs in this state.” That is a safe harbour, not the only route — subsection (f) contemplates Alaska law governing administration where (c) does not apply. The in-state content sits in the definition: AS 13.36.390(3) defines a “qualified person” as an individual who “resides in this state, whose true and permanent home is in this state,” a trust company organized under AS 06.26 with its principal place of business in Alaska, or an Alaska-principal-place bank or national banking association exercising trust powers. On the protection itself, AS 34.40.110(a) lets a transfer restriction reach “a beneficiary of the trust, including a beneficiary who is the settlor of the trust.” Subsection (b) then lists what defeats it, beginning with a creditor who “establishes by clear and convincing evidence that the settlor’s transfer of property in trust was made with the intent to defraud that creditor” — and adding, in the same clause, that “a settlor’s expressed intention to protect trust assets from a beneficiary’s potential future creditors is not evidence of an intent to defraud.”

Wyoming. Wyo. Stat. Ann. § 4-10-510(a) lets a settlor create a qualified spendthrift trust with a trust instrument that states it is a qualified spendthrift trust under that section, expressly incorporates Wyoming law, subjects the settlor’s interest to a Wyoming spendthrift provision under Wyo. Stat. Ann. § 4-10-502, and is irrevocable. The “qualified trustee” it must appoint is defined at Wyo. Stat. Ann. § 4-10-103(a)(xxxv) as a Wyoming-resident natural person, or an entity authorized by Wyoming law to act as trustee or a regulated financial institution carrying on one of four listed activities in the state — and subparagraph (C) excludes the settlor and any nonresident natural person from serving. Wyo. Stat. Ann. § 4-10-512(b) requires an affidavit from the settlor in the form set out at Wyo. Stat. Ann. § 4-10-523 for a qualified transfer, “except that no affidavit shall be required for a transfer under W.S. 4-10-515” — the section covering transfers between qualified spendthrift trusts and transfers in from a comparable out-of-state trust.

The common requirement across all five is a trustee inside the state, and in four of them the statute reaches the administration too. Two of those four state it as a condition rather than a command. South Dakota’s SDCL 55-3-39 makes a state jurisdiction provision “valid, effective, and conclusive” if three things are true, one of them that administration “occurs wholly or partly in this state” — and the section closes by disclaiming exclusivity: “Nothing in this section may be construed to be the exclusive means of providing a valid effective and conclusive state jurisdiction provision.” AS 13.36.035(c) is built the same way, and subsection (f) contemplates Alaska law governing administration where (c) does not apply. Delaware and Wyoming attach theirs to the trustee instead: a Delaware qualified trustee must maintain custody or records in Delaware, prepare fiduciary returns, or “otherwise materially participate[] in the administration of the trust” (12 Del. C. § 3570(8)b.), and Wyoming defines a qualified trustee by the same list of in-state activities (Wyo. Stat. Ann. § 4-10-103(a)(xxxv)(B)). What all four have in common is the tense. Each describes something that has to keep being true, not a box ticked once at formation — and that, rather than any single mandatory verb, is the practical point.

What South Dakota law does address is SDCL 55-3-39, and it addresses it as a condition rather than a command. A South Dakota governing-law provision “is valid, effective, and conclusive for the trust if all of the following are true”: some or all of the assets, or physical evidence of them, are held in the state and administered by a qualified person; a qualified person is designated as trustee; and administration — the statute gives “physically maintaining trust records in this state and preparing or arranging for the preparation of … an income tax return” as its examples — “occurs wholly or partly in this state.” The section then adds that “[n]othing in this section may be construed to be the exclusive means of providing a valid effective and conclusive state jurisdiction provision,” so these are the terms of a safe harbour, not the only way to get there.

With one qualification, and it governs the use this page is actually about. SDCL 55-16-3 defines a qualified person for the qualified-disposition chapter as one who qualifies under § 55-3-41 “and who meets all the requirements of § 55-3-39 other than the transferor.” For a qualified disposition — the asset-protection use — § 55-3-39’s conditions are pulled in by reference and stop being optional. The safe harbour is elective for a South Dakota governing-law clause in general. It is not elective for this.

Minnesota’s voidable-transactions law contains no exception for assets moved out of state

Minn. Stat. § 513.44(a) makes a transfer voidable as to a creditor “whether the creditor’s claim arose before or after the transfer was made,” where the debtor made it

(1) with actual intent to hinder, delay, or defraud any creditor of the debtor

Paragraph (b) lists eleven factors bearing on actual intent. Two of them describe the ordinary asset-protection fact pattern with uncomfortable precision:

(2) the debtor retained possession or control of the property transferred after the transfer;

…

(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

And paragraph (c) sets the Minnesota burden: “A creditor making a claim under paragraph (a) has the burden of proving the elements of the claim by a preponderance of the evidence.” That is a materially lighter burden than the clear-and-convincing standard South Dakota, Nevada, Delaware, and Alaska impose in their own courts on their own qualified dispositions. Which standard governs a particular dispute is a choice-of-law question, and it is the whole ballgame in a contested case.

What § 513.44 does not contain is any provision about situs, conflicts of law, or transfers out of state. It draws no distinction between a transfer down the street and a transfer to a trustee in Sioux Falls, and it does not say which law a Minnesota court should apply when the two conflict. South Dakota, for its part, legislated on exactly that point: SDCL 55-16-10 closes by declaring its own limitations rules and §§ 55-16-9 and 55-16-11 to 55-16-13 “inseparably interwoven with substantive rights, and a deprivation of legal rights would result if another jurisdiction’s contrary laws and regulations are applied to a claim or cause of action described therein.” Two statutes, each drafted to govern, neither yielding to the other on its own terms.

Duration: the 2025 amendment that made most of the comparison obsolete

Minnesota adopted the uniform statutory rule against perpetuities in 1987 — Minn. Stat. § 501A.07 provides that “[s]ections 501A.01 to 501A.07 may be cited as the ‘Uniform Statutory Rule Against Perpetuities’” — validating interests that vest or terminate within 90 years. That 90-year figure is the premise of the “you need South Dakota” comparison as it is usually made.

It is no longer the rule for new trusts. Minn. Stat. § 501A.01(f) (2025), added by 2025 Minn. Laws ch. 15, § 1:

For any trust created on or after August 1, 2025, this section shall apply to a nonvested property interest or power of appointment contained in a trust by substituting the term “500 years” for “90 years” in each place it appears in this section, unless the terms of the trust require that all beneficial interests in the trust vest or terminate within a lesser period.

Two limits are on the face of it. The 500-year period reaches only trusts created on or after August 1, 2025 — an existing Minnesota trust is still on the 90-year track. And a trust whose own terms require earlier vesting is held to its own terms.

Against that, the competing figures:

• South Dakota, SDCL 43-5-8, in a single sentence: “The common-law rule against perpetuities is not in force in this state.”
• Nevada, NRS 111.1031(1)(b): an interest is invalid unless it “either vests or terminates within 365 years after its creation.”
• Delaware, 25 Del. C. § 503(a): no interest in personal property held in trust is void under any perpetuities rule. Subsection (b) puts real property held in trust on a 110-year clock, after which the parcel is distributed under the trust’s termination provisions.
• Alaska has no rule against perpetuities for property interests at all. AS 34.27.050, the old statutory rule, reads “[Repealed, § 9 ch 17 SLA 2000.]”, and AS 34.27.075 provides that AS 34.27.051 through 34.27.100 “supersede the rule of the common law known as the rule against perpetuities. The common law rule against perpetuities does not apply in this state.” The 1,000-year figure people quote comes from AS 34.27.051(a), and it does different work: a general or nongeneral power of appointment not presently exercisable because of a condition precedent is invalid unless within 1,000 years the power is irrevocably exercised or terminates. What Alaska does still have — and what a duration comparison usually omits — is AS 34.27.100, under which a future interest or trust is void if it suspends the power of alienation for at least 30 years after the death of an individual alive when the interest or trust was created. That reads like a hard cap and mostly is not one, because subsection (b)(2) provides that the power is not suspended where “the trustee of the trust has power, either express or implied, to sell the property,” or where someone alive at creation holds an unlimited power to terminate the trust. A trustee power of sale, standard in modern drafting, takes a trust outside the rule.
• Wyoming, Wyo. Stat. Ann. § 34-1-139(b): a trust created after July 1, 2003 holding property other than or in addition to real property “shall continue for up to one thousand (1,000) years,” on three conditions — the trust is governed by Wyoming law; the trustee maintains a place of business, administers the trust, or resides in Wyoming; and the trust terms require any power of appointment over the non-real property to terminate, and the interests to vest or terminate, no later than 1,000 years after creation. Subsection (a) leaves Wyoming real property under the common-law rule.

Income tax is the gap that did not close — with a constitutional edge

Minn. Stat. § 290.01, subd. 7b(a) defines a resident trust to include one that

is an irrevocable trust, the grantor of which was domiciled in this state at the time the trust became irrevocable

Read plainly, Minnesota claims a trust permanently on the basis of where one person happened to live on one day. And a resident trust is taxed on income a nonresident trust is not: under Minn. Stat. § 290.17, subd. 2(c), “[i]ncome or gains from intangible personal property not employed in the business of the recipient of the income or gains must be assigned to this state if the recipient of the income or gains is a resident of this state or is a resident trust or estate.” That is the provision Fielding cites for the point, and the Department of Revenue states the same thing in plainer words: “Minnesota taxes resident trusts on all their income or gains from intangible property, such as stocks and bonds.”

That reading has a ceiling. In Fielding v. Comm’r of Revenue, 916 N.W.2d 323 (Minn. 2018), four irrevocable trusts created by a Minnesota grantor were classified as resident trusts on exactly that basis. By the 2014 tax year the trustees lived in Colorado and Texas, all administration occurred outside Minnesota, and the income-producing intangible assets were held outside the state. The Minnesota Supreme Court affirmed the Tax Court:

Because we conclude that the Trusts lack sufficient relevant contacts with Minnesota during the applicable tax year to be permissibly taxed, consistent with due process, on all sources of income as residents, we affirm the decision of the Tax Court.

Id. at 325-26.

Three of the court’s reasons matter for anyone reading the statute today. The grantor’s own Minnesota connections did not count, because after 2011 “he no longer had control over the Trusts’ assets.” Id. at 330. The trusts’ interest in a Minnesota S corporation did not count, because what they held was stock, an intangible, held outside Minnesota. And contacts predating the tax year at issue did not count at all — the court refused to “pick and choose among historical facts unrelated to the tax year,” warning that the alternative “could force taxpayers to challenge tax liability annually until a court determines that the past contacts have sufficiently decayed . . . .” Id. at 332.

The holding is narrow on its face: “We therefore hold that Minn. Stat. § 290.01, subd. 7b(a)(2), is unconstitutional as applied to the Trusts.” Fielding, 916 N.W.2d at 334 (emphasis added). Two justices dissented. And the definition quoted above is the text as it reads on the Revisor’s site today, word for word identical to the version the court quoted in 2018. The Legislature has not rewritten it.

The Department administers that boundary rather than ignoring it. Its published guidance states that “[a] trust must have minimum connections to Minnesota to be taxed as a resident trust,” and then lists connections it considers — expressly “include but are not limited to,” so the list is illustrative rather than closed. Eight are named: the residency of trustees, fiduciaries, protectors, advisors and custodians; the location of the trust’s tangible and intangible assets; the location of its administration; the law made applicable by the governing documents; the residency of beneficiaries and whether they have “some degree of possession, control, or enjoyment of the trust property”; the domicile of the grantor, settlor or testator; whether and where the trust was probated; and whether Minnesota’s courts have “a continuing supervisory or other existing relationship with the trust.” Whether the connections suffice “depends on the facts and circumstances of the situation.”

There is a form for it. A trust that meets the statutory definition of a resident trust but believes it lacks sufficient minimum connections completes Form M2RT, Resident Trust Questionnaire, and encloses it with its Form M2 return. The Department also draws a limit around the case that the case itself did not have to draw: “[t]he Fielding case dealt with trusts created during the grantor’s life (inter vivos trusts), not trusts created upon the death of the grantor (testamentary trusts).”

The U.S. Supreme Court addressed the adjacent question the following year and was careful about what it was not addressing. In North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, 588 U.S. 262, 276 (2019), a unanimous Court affirmed that a beneficiary’s in-state residence alone cannot support a tax where “[t]he beneficiaries received no income from the Trust, had no right to demand income from the Trust, and had no assurance that they would eventually receive a specific share of Trust income.” Then, at 278:

Today’s decision does not address state laws that consider the in-state residency of a beneficiary as one of a combination of factors, that turn on the residency of a settlor, or that rely only on the residency of noncontingent beneficiaries … We express no opinion on the validity of such taxes.

Minnesota’s subdivision 7b(a)(2) turns on the residency of a settlor. Kaestner expressly declined to rule on it.

The four states with no fiduciary income tax, stated precisely

• Alaska is the cleanest text. AS 43.20.012(a): “The tax imposed by this chapter does not apply to (1) an individual; (2) a fiduciary . . . .” The list continues to two fishing-related categories that do not bear on trusts. AS 43.20.011(e) imposes the chapter’s tax on corporations; subsections (a) through (d) and (f) were repealed in 1980.
• Wyoming has an income tax chapter that is an empty shell. Title 39, chapter 7 is captioned “INCOME TAXES” and contains exactly one entry: “39-7-101. Repealed By Laws 1998, ch. 5, § 4.”
• South Dakota’s Department of Revenue states it directly: “South Dakota is one of seven states that does not impose a state income tax.” The same page adds that South Dakota has neither an inheritance tax nor an estate tax.
• Nevada has a constitutional provision, and it is narrower than it is usually described. Nev. Const. art. X, § 1(9): “No income tax shall be levied upon the wages or personal income of natural persons.” A trust is not a natural person, so the constitutional bar does not by its terms reach one. What reaches it is the absence of a statute: NRS Title 32, “Revenue and Taxation,” runs from chapter 360 to chapter 377D and contains chapters on property, sales and use, business, commerce, fuels, liquor, tobacco, live entertainment, real property transfers, estates, and generation-skipping transfers. It contains no individual or fiduciary income tax chapter.

Delaware does tax fiduciaries, and then subtracts. 30 Del. C. § 1636(a) allows a resident trust “a deduction against the taxable income otherwise computed under Chapter 11 of this title for any taxable year for the amount of its federal taxable income, as modified by § 1106 of this title which is, under the terms of the governing instrument, set aside for future distribution to nonresident beneficiaries.” Accumulation for non-Delaware beneficiaries is the condition; the deduction is not automatic and is computed under the rules in subsection (b).

Where Minnesota already has what the pitch promises

The structural features that made Delaware and South Dakota famous are in the Minnesota Trust Code.

Directed trusts. Minn. Stat. § 501C.0808 authorizes an investment trust advisor, a distribution trust advisor, and a trust protector, each exercising powers “in the sole and absolute discretion” of the holder and binding on everyone. The trustee stripped of those functions is an “excluded fiduciary” who, under subdivision 6(a), and “[u]nless otherwise provided in the governing instrument,” “has no duty to monitor, review, inquire, investigate, recommend, evaluate, or warn with respect to a directing party’s exercise of or failure to exercise any power . . . .” That opening qualifier matters: it is a default the instrument can displace, not a fixed rule. Subdivision 4 lets a trust protector modify the instrument for tax purposes, adjust beneficial interests, remove and appoint trustees and advisors, and — clause (5) — “change the situs of the trust, the governing law of the trust, or both.” The section was amended in 2025, at 2025 Minn. Laws ch. 15, §§ 10-17.

Decanting. Minn. Stat. § 502.851, subd. 11(b):

An authorized trustee may exercise the power authorized by subdivision 3 or 4 without the consent of the settlor or the persons interested in the invaded trust and without court approval, provided that the authorized trustee may seek court approval for the exercise with notice to all persons interested in the invaded trust.

Sixty days’ notice, no consent, no judge. Subdivision 14 adds that a general prohibition on amendment or revocation, and a spendthrift clause, do not block it. That is a page of its own.

Spendthrift protection for third-party beneficiaries under § 501C.0502, covered here.

Five hundred years of duration, for trusts created on or after August 1, 2025.

What is left, stated as a list

After the 2025 amendment, the differences that survive are three:

1. Self-settled protection. Minnesota’s § 501C.0505, clause (2), forecloses it. Five states authorize it, and all five require a trustee inside the state. Past that they diverge, and the divergence is the part worth knowing. Four of the five also tie the arrangement to in-state administration; Nevada does not — NRS 166.015(1) lists administration in only one of four alternative triggers for the chapter to apply, joined by “or,” and nothing in chapter 166 requires it. Four of the five fix a limitations period running from the transfer rather than from the claim — South Dakota and Nevada at two years, Delaware and Alaska at four; Wyoming instead routes a challenge to its Uniform Fraudulent Transfer Act (Wyo. Stat. Ann. § 4-10-514), which this page does not examine.
2. Duration beyond 500 years. Three of the five have no rule against perpetuities to speak of: South Dakota abolished the common-law rule outright, Delaware exempts personal property held in trust from any such rule, and Alaska repealed its statutory rule and provides that “[t]he common law rule against perpetuities does not apply in this state” — though Alaska retains a separate suspension-of-alienation rule that a trustee power of sale generally takes a trust outside of. Only Wyoming sets a genuine 1,000-year ceiling on a trust’s duration. Alaska’s 1,000-year figure is not a duration cap at all — it limits how long an unexercised conditional power of appointment stays valid, which is a narrower thing. Whether a limit past 500 years has operational content for a family is a separate question from whether the limit exists.
3. Fiduciary income tax. Four of the five states impose none, and Delaware deducts accumulations for nonresident beneficiaries. Minnesota taxes resident trusts on all income, subject to the due-process boundary Fielding drew and Kaestner declined to extend.

What this page does not do

It compares statutes. It does not tell any reader whether an out-of-state trust suits their circumstances, whether a Minnesota trust protector should move a situs, or how a Minnesota court would resolve a conflict between Minnesota’s voidable-transactions law and another state’s qualified-disposition statute. That last question in particular is unsettled, fact-bound, and litigated — the pages of statute quoted above are the inputs to it, not the answer.