Substantial planning opportunities, such as the South Dakota irrevocable non-grantor Pre-Immigration Trust, exist for non-resident aliens (NRAs) who anticipate immigration to the United States e.g., an NRA corporate executive who is transferring to the United States for work purposes.
Typically, before moving to the United States, the NRA grantor would use the unlimited gift, estate and GST tax exemptions to fund a South Dakota irrevocable non-grantor Pre-Immigration Trust with South Dakota Trust Company LLC (SDTC) as trustee. Since the trust is self-settled, the NRA grantor is allowed to be a permissible discretionary beneficiary, so he can also benefit from the trust. Life insurance provides a favorable funding option for South Dakota Pre-Immigration Trusts.
Prior to immigration to the United States, the NRA makes a gift to the self-settled trust with the NRA as a permissible discretionary beneficiary. If properly structured and administered, these South Dakota irrevocable non-grantor dynasty trusts will generally avoid gift, estate, and GST taxation, as well as state income taxes, both now and for future generations.
After immigration, if the Grantor, as a permissible beneficiary, needs assets, they can be distributed by SDTC on a discretionary basis. If properly structured, the assets may also be excluded from one’s estate as well as protected from creditors and lawsuits. However, please note that if the NRA becomes a U.S. person within five (5) years of the transfer to the trust, the trust will be deemed a grantor trust for income tax purposes. Nonetheless the grantor will still have the benefits of transfer tax savings, asset protection, privacy, flexibility and control, etc..