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Insurance Trusts:

SDTC recognizes that most advisors and corporate trustees do not want to act as trustee of an Irrevocable Life Insurance Trust (ILIT) until the proceeds are actually paid, leaving the family to cope with the burdens of the unfunded insurance trust's administration. SDTC will generally act as trustee during the insured's lifetime and after the insured's death.  SDTC provides ILIT administration services for generally fixed, variable, as well as private placement policies.

There are two levels of trust administration associated with ILITS. One deals with the insured's lifetime and the other begins with the insured's death.

Administration Duties During Insured's Lifetime:

  • Creation of trust account

  • Transfer of policies into the trust

  • Purchase of new policies

  • Tax reporting

  • Preparation and transmittal of beneficiary Crummey notices

  • Monitoring of insurance companies and policies (Please note: these are the Investment Committee's responsibility with a directed trust):

-     Use of rating services like Moody's, Standard & Poor, Duff & Phelps, and Weiss

-     Independent analysis of each company's dividend history, expense ratio & portfolio (i.e., asset allocation, asset & bond quality, non-performing assets)

-     Periodic review of policy appropriateness for trust objectives

-     In-force  ledger update analysis

Administration after insured's death:

Collection of proceeds

Distribution and/or continued administration of trust assets

 
 

 

An important issue to consider regarding the state premium tax is the retaliatory tax. A retaliatory tax generally allows the state to whom the premium tax is paid to impose the premium tax of the state in which the insurance company is located if that rate is higher. South Dakota by statute does not generally provide for the ability to charge a retaliatory tax for a large case. It is also very important to verify that the domestic insurance companies recognize the low state premium taxes in South Dakota.

For additional information please contact us or visit SDTC's main website, www.sdtrustco.com.

The information on this Private Trusts website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.