Davenport Evans: Forming a South Dakota Trust Company - Dixie Hieb

Описание: Sioux Falls lawyer Dixie Hieb discusses Forming a South Dakota Trust Company, at Davenport, Evans, Hurwitz & Smith Law Firm. TRANSCRIPT available via YouTube: Hello. I’m Dixie Hieb, and I’m a member of our firm’s financial institutions practice group. Much of my practice focuses on the formation and ongoing operation of public and private trust companies, and today I’m going to discuss some of the key considerations in forming a South Dakota trust company.
The formation of a South Dakota trust company is attractive to families who are seeking more control over the investments in family trust accounts, as well as a possible reduction in trustee fees. However, the most significant growth in the formation of South Dakota trust companies has been in the area of public trust companies, where the formation of a trust company may relieve an advisor of some of the otherwise applicable SEC registration requirements.
Once the decision to form a trust company has been made, the next key decision is the jurisdiction in which the trust company should be located. South Dakota has consistently ranked at the top of various listings regarding both trust laws and trust company laws. We have a business friendly, low-tax state with legal advisors who are well versed in trust and trust company law. We also have a positive regulatory environment, with a Division of Banking that has overseen the growth in the trust industry in our state.
Application and operational requirements for a South Dakota trust company are fairly straightforward. However, if you are interested in forming a public trust company, there are some key take-aways of which you should be aware. The trust company will be required to have a physical South Dakota office staffed, at least part-time, by an employee or through an independent contractor arrangement. You will also need to meet the minimum capital requirements. Although the statutory minimum is $200,000, the South Dakota Division of Banking generally requires a minimum of $400,000 for public trust companies, with a higher amount for those seen as having greater risk, such as companies dealing in crypto currency. Of that amount, a portion must be pledged to the South Dakota Division of Banking. Generally that pledge is at least $200,000. So a trust company must capitalize at an amount that ensures that its capital will not fall below the minimum required by the Division of Banking.
A public trust company’s governing board must be comprised of between five and twelve members, one of whom must be a resident of South Dakota and at least one-half of whom must be citizens of the United States. The trust company’s board must meet at least once each quarter, and at least two of those meetings must be held with a quorum physically present in South Dakota.
There are a number of other requirements and considerations to be taken into account in structuring a trust company in South Dakota. The attorneys at our firm have assisted with the formation of over 80% of South Dakota’s trust companies, and we work with a large number of trust companies on an ongoing basis. We can provide assistance at any stage in the application process. Please feel free to contact me or one of our other trust company attorneys for assistance.