Does the location of my trust affect the legality of it?

Does the location of my trust affect the legality of it? Absolutely, in fact, it is widely accepted that the “situs” of a dynasty trust (or virtually any other trust) is essential to the keeping the trust legal and intact. For maximal protection, it ought to be located in either Nevada, South Dakota, Tennessee, Arkansas, Rhode Island, or Wyoming, though these states vary widely in statutes.[1] Moreover, certain states are either extremely hostile or outright ban trusts, such as ING-style trusts that are effectively prohibited in New York or California.[2] Indeed, “[n]o trust should ever be created without the advisor knowing the residency of the settlor, the proposed trustees and the beneficiaries….You have to look at the state taxing statutes that may apply.”[3] The trust’s main administrative business must be conducted in the state of situs with the independent trustee being a resident of that state[4], even if the administration is minimal in nature.

Sources

[1] https://www.klw-law.com/can-someone-sue-a-family-trust

[2] https://www.oshins.com/_files/ugd/b211fb_a6190c927f7c4feb92d5a40835cf243a.pdf

[3] https://canarick-law.com/what-is-a-ning-trust/

[4 https://www.thewealthadvisor.com/article/kaestner-case-and-new-emphasis-using-non-grantor-trusts-save-state-income-tax?page=105