The stand-by or pour-over South Dakota Dynasty Trust is a strategy for Non-Resident Aliens (NRAs) with United States beneficiaries that have established foreign trusts in offshore jurisdictions.
The stand-by South Dakota Dynasty Trust both lessens and avoids burdensome income tax filing requirements for the United States beneficiaries and the negative United States income tax rules on distributions of accumulated income. Upon the grantor’s death, the foreign trust “pours over” the offshore trust assets to an existing (nominally funded) stand-by South Dakota Dynasty Trust for the benefit of U.S. beneficiaries. These trusts, with South Dakota Trust Company LLC as trustee, are cost-effective as they are nominally funded (i.e. $10) during the NRA’s lifetime and as such only require a one-time fee until fully funded at the NRA’s death.