South Dakota Revises Trust Provisions, Authorizes Grantor Income Tax Reimbursement

The South Dakota Governor singed a law revising multiple trust provisions, including authorizing a trustee, under specified conditions, to reimburse a trustor for personal income tax liability attributable to grantor trust treatment under I.R.C. §§ 671–678. The law provides that such reimbursement does not cause the trustor to be treated as a beneficiary under state law, limits use of life insurance cash value for reimbursement, and applies only to trusts created or administered in South Dakota on or after July 1, 2026. The law also amends provisions related to trust decanting, advancements, fiduciary attorney-client privilege, fraudulent transfer limitations, and special ...