Perpetual trusts are inter vivos or testamentary trust that hold significant assets and last for at least the period of the rule against perpetuities of the governing state law or, if there is no such rule, forever. Clients often use perpetual trust for their $1 million exemption from the federal generation-skipping transfer tax (GSTT). This article first describes the tax and non-tax characteristics of perpetual trusts. The article then focuses on perpetual trusts under South Dakota law, which is well suited to the establishment and maintenance of perpetual trusts because the state has no rule against perpetuities or state income tax
What Is A Perpetual Trust
The primary purpose of a perpetual trust is to create a large fund that will be available for future generations of the trustor's family. Although only the drafting lawyer's imagination limits the substantive terms of the trust, a perpetual trust typically gives its trustees complete discretion about whether, when and how much
