Posts Tagged South Dakota Division of Banking
New Banking Chief Wanted in South Dakota ASAP
Posted by Scott Martin in News on March 20, 2011
Director’s retirement means a new era ahead for the trust-friendly state’s Division of Banking. Outsiders with experience reviewing applications are welcome to apply.
When the listing for “Director, Division of Banking” hit the employment websites last Thursday, it came as a surprise to out-of-state industry observers.
But while early speculation focused on whether Roger Novotny had parlayed his 7 years of success in wooing trust companies to Pierre into an even better job elsewhere, the official word on the ground is that he’s retiring.
“He simply wrote his letter of resignation and now we’re collecting applications to find his replacement,” says a state government spokesperson.
Members of the South Dakota trust community say Novotny — who worked an almost uninterrupted four decades for the state — has been laying the groundwork for stepping down for awhile now, but the timing was always on the vague side.
“I met with him for a half hour about a month ago, and he indicated then that he would be retiring in the near future,” says Sioux Falls estate attorney Daniel Donohue.
“At the time, I thought it was more along the lines of long-term guidance, and not an immediate proposition,” he concedes.
In fact, Novotny’s resignation is effective on May 1, which only gives the state’s human resources department a month and a half to collect resumes and then make a decision if it wants to ensure that there’s no interruption at the top.
What they’re looking for
The advertisement gives the public a rare window into exactly what a state banking director does.
At least in South Dakota, Novotny’s replacement will review all examinations, enforce the regulations, oversee a staff of 20 and weigh in on applications for state trust and banking charters. The buck will stop at his or her desk.
As currently envisioned, the job will also involve a remarkable amount of PR in the form of “responding to media and consumer questions.” Unlike other states where banking regulation is a bureaucratic black hole, South Dakota apparently expects its new banking director to maintain a fairly high public profile — and to be able to play the political game.
The listing spells out exactly what the government’s HR team is looking for:
“Preference will be given to applicants with bank management or regulatory experience, have proven success working with a team, excellent public speaking and communication skills and strong negotiation skills. Progressive experience in a professional management position that included budgeting, policy development, strategic vision, stakeholder relations, supervising professional staff and graduation from an accredited college or university with a degree in banking, finance, business administration or related field is desired.”
Members of the Trust Advisor Blog community may want to take a shot — if the state is willing to consider someone actually from the trust industry. Serious applicants need to be willing to relocate and start salary negotiations at a base of $85,000. Three references are required.
The state will start looking at resumes on April 1 and the government spokesperson tells me they’ll announce a decision fast once they find the right candidate.
Lessons from the last regime
The question is whether that announcement can come before Novotny leaves on May 1.
Last time around, back in 2003-4, there was no need to rush the process. When Novotny took the job, it was after a 9-month gap that Catherine Brandner — long-time deputy to the state’s top banking cops — filled in as temporary replacement for Richard Duncan.
But Brandner herself retired back in 2007, which means that unless the state moves fast, current deputy director Tim Ahartz will probably fill in.
Naturally, there’s nothing preventing Ahartz or any other Division insiders from applying for the position on their own behalf, in which case the process may move faster.
“They may have groomed a replacement from within, in which case the public listing would serve largely to make sure they’re casting the widest net possible,” Dan Donohue says.
A solid legacy to continue
Novotny left his successor — whoever it is — with a solid foundation on which to build.
“He’s been a pretty steady good hand for South Dakota,” says Donohue.
Although South Dakota first started to emerge as a center of the national trust industry back in the 1980s, the process kept going in Novotny’s 7-year regime.
The state’s low capital requirements encouraged applications from out-of-state companies looking for a place to do business, while their clients were grateful to get access to South Dakota’s top-of-the-line trust code.
All in all, 33 public and private trust companies launched in South Dakota during the Novotny era.
That’s easily half of the current roster of trust companies doing business in the state that owe their genesis to his approval, and the raw numbers will be hard for his successor to match.
Still, with three applications left in the pipeline and a typical turnaround time of a few months, Novotny may even christen a few more trust companies before he leaves.
In addition to Santa Fe Trust, which is looking to add a South Dakota charter to its New Mexico-centered operation, Concord Trust and Covenant Trust have also filed the paperwork to do business in South Dakota.
Permalink: http://thetrustadvisor.com/news/novotny
Kansas Trust Company To Restart in South Dakota
Posted by Scott Martin in News on August 14, 2010
Great Plains becomes the second trust company to restart in South Dakota this year. Both will reap the benefits of strong asset protection, perpetual trusts and no state taxes.
Overland Park-based Great Plains Trust has become the second established trust company this year to file the paperwork to transfer to the bustling jurisdiction of South Dakota.
According to the South Dakota Division of Banking, Great Plains—which claims over $1 billion in fiduciary assets—applied for a trust charter in July.
In June, Denver-based United Western Trust got its South Dakota charter. General counsel Ted Abariotes tells The Trust Advisor that the rationale was pretty simple.
“We just couldn’t find all the compelling benefits that South Dakota has to offer anywhere else,” he says.
Restarts are popular
United Western and Great Plains are only the leading edge of a record-breaking wave of 11 out-of-state trust companies starting in or moving to South Dakota this year.
Applicants are coming from as far away as Pennsylvania, and even include institutions based in states like Nevada that are normally considered centers of the trust industry in their own right.
Seven have received their charters so far, while Great Plains and three others are pending. If they all get approval from the Division of Banking, it would bring the state’s roster of trust companies to well above 50, compared to 40 in Delaware and 25 in Nevada.
As a result, trust services have become big business in the trust-friendly state. South Dakota booked a record $262,651 in trust-oriented revenue last year in the form of examination and supervision fees.
Great Plains trust officer Michael Sears wouldn’t speculate about the appeal of South Dakota or his company’s motivations for letting go of the Kansas charter it had held since 1994.
However, local estate planners are pretty sure Great Plains, like United Western before it, is going to South Dakota in order to give clients access to trust structures and tax breaks they couldn’t get at home.
“I can easily see the upside,” says Sam Scott, a financial planner at Sunrise Advisors who does a fair bit of trust work. “There are some scenarios where the move to South Dakota jurisdiction could save a Kansas client quite a bit of money.”
Taxes and flexibility
First and foremost, moving the trust administration out of state translates into freedom from Kansas income tax liability, Scott explains. Because South Dakota has no state income tax, this immediately generates 6.45% a year in extra income for beneficiaries.
Beyond that, South Dakota provides a retail-oriented trust company like Great Plains with much wider flexibility in the types of account structures it can offer.
Kansas doesn’t even support total return trusts, Scott says. Especially in the current rate-squeezed environment, shifting clients who need cash flow out of state-mandated income-only accounts could go a long way toward improving their lifestyles and making them happier.
When asked to speculate why Great Plains might be moving, Northwestern University law professor Max Schanzenbach—who has studied state-versus-state competition for trust company business in partnership with Harvard professor Robert Sitkoff—went immediately to the chance to offer perpetual trusts and asset protection trusts.
South Dakota and a few other states allow trusts to operate forever, unlike Kansas, where the amount of time wealth can remain in trust is capped at 21 years after the death of the last original beneficiary.
And while neighboring Missouri, where Great Plains has been operating as a fiduciary since 2006, allows domestic asset protection trusts, moving the primary charter will help the company offer these increasingly popular products to all of its clients.
Kansas doesn’t offer them, but South Dakota, Nevada, Delaware and nine other relatively trust-friendly states do.
Asset protection trusts aren’t just for celebrities looking to shield their wealth from a divorce decree, says Rick Kahler, a financial planner based in Rapid City, South Dakota.
“Doctors and other business owners also appreciate the protection,” he explains. “The power to block any distribution is a unique benefit and they’re pretty simple to put in place.”
Putting favorable statutes behind a local face
Max Schanzenbach rattles off a few other reasons why a trust company might move to South Dakota—favorable private trust laws, franchise tax or regulatory oversight issues, the chance to move closer to the state’s banking community.
Compared to Delaware and Nevada, the barriers to entry in South Dakota for a start-up are relatively low. While capital requirements can climb at regulators’ discretion, a new company only needs to post $200,000 for a South Dakota charter, versus up to $1 million elsewhere.
However, the key motivators for established institutions like Great Plains usually boil down to tax benefits and flexibility.
As Schanzenbach’s research with Robert Sitkoff revealed, about $100 billion in fiduciary assets shifted out of states like Kansas to tax-friendly asset protection jurisdictions like South Dakota between 1995 and 2003, and the trend seems to be continuing.
In fact, Kansas planner Sam Scott cites similar reasons for why he sets up his clients’ trusts through Charles Schwab’s Delaware-chartered trust company.
“Kansas is a state where it can be easy to get around some of the things you need to get around,” he explains.
“And let’s face it, as long as you have someone on the ground where your clients live, nobody knows where your charter is. It could be in Alaska.”
Correction: On September 21, the Trust Advisor Blog received an email from Mike Sears on behalf of Great Plains Trust Company informing us that (1) Great Plains Trust Company is not restarting in South Dakota; and (2) will not be letting go of its Kansas trust charter.
Scott Martin, contributing editor, The Trust Advisor Blog. Steven Maimes contributed to the research and the editing.
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Permalink: http://thetrustadvisor.com/news/greatplains
Dow Jones Weighs in on South Dakota Trusts
Dow Jones is not blind to either the burgeoning interest in South Dakota as a trust-friendly jurisdiction or state regulators’ desire to make sure trust companies that set up shop are well capitalized and high quality.
Here’s an excerpt from DJ reporter Arden Dale’s recent article:
South Dakota began making a push to attract trust business with a key statute it put on the books in 1995. It now ranks with Delaware, Nevada and Alaska as one of the most popular places to set up a trust company.
South Dakota historically has attracted an especially large number of private trust companies, which are run by family members. About five years ago, though, more public companies began coming in, according to Bret Afdahl, division counsel at the South Dakota Division of Banking.
The state updates its trust law annually, through a governor’s task force on trust administration …
South Dakota Sets Record for New Trust Companies
Posted by Scott Martin in News on May 15, 2010
South Dakota is becoming the top choice for trust providers. With ten new launches this year and a roster of 50 institutions shortly, it’s easy to see why banks and advisors alike are flocking to the wealth-friendly state. But despite the welcome mat, screening for new players “isn’t easy.”
This week, the South Dakota Division of Banking announced that Pittsburgh-based Mid Atlantic Capital Group, a $19 billion wealth manager and trust technology provider, applied to receive a charter. Approval is expected before July 1.
Mid Atlantic’s not the only Pennsylvania trust operation to set up shop in South Dakota. Earlier this year, Consohocken, PA-based multi-family office Sterling Trustees decided too that South Dakota’s compelling trust benefits made it better than the other no-tax dynasty trust states.
Sterling’s president Antony Joffe told me, “We picked South Dakota because we wanted the best trust law environment and thought they had what we needed.”
They just received official approval this week and are now ramping up ambitious plans to offer trust services to registered investment advisors, as well as more effectively run the roughly $500 million in high-net-worth trust accounts they already have.
Sterling is one of seven public trust company going through South Dakota’s approval process this year. Denver-based United Western Bancorp’s UW Trust Company, with $2.6 billion in assets, received its approval at the end of March.
Counting Mid Atlantic, three other applications in the pipeline, and private trust companies, and a record 10 companies have entered the South Dakota system so far this year.
One of them, Kingsbridge Trust Company, was launched by Kingsbridge Private Wealth Management of Las Vegas to complete its suite of family office services. CEO David Dunn told the Trust Advisor Blog that the process “isn’t easy,” with hours of meeting with regulators and answering tough questions. “It required a great deal of background work just to file the application,” he says.
“We’re okay with startups”
What’s driving the flood? Five months ago, Les Revzon, president of trust consulting firm Advisors Institutional, who assisted Mid Atlantic with its trust charter application, attended a meeting in Pittsburgh with Mid Atlantic VIP’s to lay out the case for why South Dakota might be the best place to host its new trust company operations.
It didn’t take more than 10 minutes for the honchos at the table to overwhelmingly agree that South Dakota would be their new home. With the benefits adding up—no taxes, dynasty trusts, asset protection trusts, directed trusts, low capital requirements and affordable on-the-ground services—they were sold. All of that sounded a lot better than posting $1 million in regulatory capital in Nevada or Delaware, big staffing costs and waiting over a year for a trust charter.
The interest in the state’s trust environment isn’t too surprising, says Bret Afdahl, counsel for the South Dakota Division of Banking.
“We’re business-friendly, which means that we want our trust companies to succeed,” he told me. “Profit is not a swear word in our state.”
Afdahl likes to discuss the advantages of his state’s trust jurisdiction, and with good reason: According to state statistics, the Division of Banking booked a record $262,651 in trust-oriented revenue last year in the form of examination and supervision fees.
To attract new institutions that measure up, capital requirements are low. A trust company needs to post $200,000 to set up shop in the state. Other centers of the trust industry like Delaware and Nevada require $1 million or more to obtain a trust charter.
New legislation kicks in July 1 to tighten the capital requirements at regulators’ discretion, but this is aimed at established institutions that might run into trouble, Afdahl told me. “We’ll keep it low on the front end to allow for startups,” he says.
Although the new rules also mandate additional background checks for principals and key employees, the South Dakota approval process is streamlined compared to other jurisdictions.
Antony Joffe got the green light in about five weeks, compared to an estimated year to move an application through the Delaware system or up to two years of dealing with the FDIC for a federal trust charter.
Nevada’s quest for modernization
By sheer number of operating trust companies, South Dakota has leapt ahead of Nevada and even Delaware.
Nevada’s lack of appeal for new trust institutions seems odd when you consider that the state went through a great show of modernizing its trust statutes late last year in order to attract new business.
State regulators wouldn’t comment on success or failure. However, a source familiar with local politics says “updating” the rules was less about making the state friendlier to public trust companies and more about setting up barriers to entry.
“You can probably read behind the lines and see that the number of public trust companies in the state hasn’t budged this year,” my source told me. “The new capital requirements make it more difficult for public companies to be formed.”
We were unable to interview officials from Delaware, but according to Bret Afdahl, the issue for that state’s regulators is “quality,” or at least exclusivity. Delaware is legendary for enforcing extremely stringent audit and residence standards that can be too expensive for smaller players to consider.
“Delaware’s rules only really allow for big companies,” he told me. “You need X square feet and Y full-time employees, of whom Z must be trust officers. It doesn’t disallow startups, but you need to be pretty big to cover the initial expenses.”
When it comes to operating on the ground in South Dakota, Sterling Trustees’ Antony Joffe is excited. He plans to set up an office and move all his existing fiduciary activities there.
“We’ll still manage some trusts here in Philadelphia on an individual basis, but we’re going to try to run as much as we can out of South Dakota,” he told me.
Scott Martin, contributing editor, The Trust Advisor Blog. Steven Maimes and senior editor Jerry Cooper contributed.
Permalink: http://thetrustadvisor.com/news/sd-record
Pennsylvania Family Office Provider To Start South Dakota Trust Company
Posted by Scott Martin in News on March 4, 2010
Charter would likely help DM Trust defectors build out a “formidable” platform.
PIERRE, SD, Mar 3 – Sterling Trustees LLC, a Philadelphia-area family office service provider, has filed to receive a trust charter in South Dakota, according to a report released this week by the South Dakota Division of Banking.
A Sterling spokesman confirmed to the Trust Advisor that it has submitted the paperwork to launch a public trust company in the state, but declined to comment further while the application is still pending.
According to the company’s website, Sterling currently provides private trust and family office services to high-end clients; it also offers trust administration services to investment advisors, lawyers and other professionals to add value to their own client relationships.
CEO Stanley Joffe is known in Philadelphia legal circles as a high-powered attorney focused on international estate planning issues. He founded and ran then-Pennsylvania-chartered trust company DM Trust (now operating as Everest Trust with a Delaware charter) as a subsidiary of local law firm Duane Morris in 2007 but went independent a year later to launch Sterling. His son Antony followed him to his new company and serves as president.
“My guess is that they broke up with Duane Morris and formed this new deal themselves,” Jeffrey Lauterbach, founder of Capital Trust, told us. “They look like they’ve got a pretty formidable family office set-up, so this charter might give them added support for that.”
The trust charter would likely help Sterling build out a “formidable” trust platform, he said. In particular, he noted that the company is using Rockit, the elite high-end family office software package developed to handle the Rockefeller family’s needs.
As to why they picked South Dakota, the state has actively courted the business through a combination of an inviting tax regime and trust-friendly statutes. Sterling is the second public trust company this year to start up in the state.
Lauterbach says, “They probably just decided they liked it better than Delaware. Delaware’s gotten kind of tough.”
South Dakota’s getting even easier. The state legislature passed a bill this week that aims to “strengthen the legal and regulatory framework for public trust companies.”
Scott Martin, contributing editor, The Trust Advisor Blog.
Permalink: http://thetrustadvisor.com/news/sterling
Colorado Bank to Restart its Texas Trust Company in South Dakota
Posted by Jerry Cooper in News on February 12, 2010
Exclusive
Banks and advisors continue to flock to top-rated South Dakota for favorable trust laws and cost-efficient operations.
PIERRE, SD., Feb 12 – Denver-based United Western Bancorp (Nasdaq: UWBK) has applied to receive a trust charter in South Dakota, according to a report released this week by the South Dakota Division of Banking.
A United Western spokesman confirmed to the Trust Advisor Blog that it has filed with the South Dakota Division of Banking to restart its current Texas-based trust operation, once part of Sterling Trust, with a South Dakota charter.
United Western, according to its website, is the third-largest savings bank in the western United States, with eight full-service community banking branches scattered across Colorado’s affluent Front Range, $2 billion in deposits and about 370 employees.
In April last year, United Western sold most of its lucrative Sterling Trust Company, a pricy alternative asset custodian, for $61 million to the Ohio-based owner and operator of Equity Trust Company of South Dakota. The deal closed in June. The remainder firm, known as United Western Trust Company or UW Trust Company, is now a relatively small Waco-headquartered and chartered trust company with roughly 12 employees and $26 million in trust (as of September 30, 2009). In its present form, the company primarily provides legacy, escrow, life insurance settlement and paying agent service accounts.
Restarting UW Trust under a South Dakota charter would immediately enable United Western to take advantage of that state’s bank-favorable regulatory environment, says Denver estate attorney David Kirch. “States have been enacting more trust-friendly laws and South Dakota is definitely one of the friendly types,” he told The Trust Advisor. “That’s probably why they chose it.”
Jon C. Walls, a banking industry expert and former Lehman Brothers investment banker, told the Trust Advisor that “United Western’s Scott T. Wetzel is a veteran banker with experience at both Compass Bancshares and KeyBank. He understands the important role non-spread businesses can play in diversifying the revenue mix of a community bank.”
Walls added, “While capital adequacy issues seemingly prompted the sale of the bank’s trust division in mid-2009, its successful common stock offering last September put it at levels exceeding regulatory requirements.”
“This announced charter move seems to signal the bank’s intention to rebuild that potentially important business on the stronger platform offered by the South Dakota trust laws. This would be consistent with Wetzel’s strategy of transforming the wholesale institution he took over back in 2005 into a full service community bank,” Walls added.
UW Trust Company is part of a recent trend of wealth management firms launching in South Dakota as public trust companies. South Dakota public trust company start-ups surged last year. With six public trust company start-ups, 2009 was a record year for the state.
Benefits for South Dakota 
According to public records, South Dakota now has 39 trust companies and is the top choice. Delaware is next, with 32 trust companies, followed by Nevada with 29.
There’s strong evidence that the state benefits. According to the state’s 2009 annual report, the South Dakota Division of Banking brought in a record $262,651 in combined examination and supervision fees from hosting trust companies. To keep the fees flowing, state lawmakers are considering a bill that would further “strengthen the legal and regulatory framework for public trust companies.”
As states bid for trust business, they often will not tax those assets they are betting on for increased economic activity that will bring other prosperity to the state in the form of job creation, corporate tax revenue collected from trust companies and corporate tax assessments from the trust companies.
It is for this reason South Dakota and other states continue to sharpen their pencils and enact new laws designed to attract wealthy baby boomers and their parents’ estates for future generations. Trust accounts have been an important part of the investment landscape.
Trusts can be created for a variety of other purposes, including avoiding probate, passing on a family home to heirs, protecting money from creditors, caring for a disabled child or even providing for a pet after one dies. Trusts continue to grow in popularity thanks to the aging population, more aggressive marketing by financial firms and concerns about maximizing trusts’ growth performance.
Asset protection trusts have gained in popularity as marketing vehicles for advisors. Doctors, business executives and other professionals have become increasingly interested in these trusts, advisors say.
With these, you transfer assets into a trust run by an independent trustee who can give your client distributions from time to time. These trusts, if set up properly, are in most cases able to keep the assets of the trust out of reach of creditors.
For wealth management organizations, advisors can gain additional income and provide more value to their service by bundling trust services within investment management.
Last year, several advisory firms launched their own trust companies in order to be better positioned to provide these services. These included Wealth Advisors Trust Company and Dominion Trust Company in South Dakota, with both launches targeting wealthy clients from a wealth-friendly trust state. This trend was featured in an Investment News article last summer, More Advisory Firms Expected to Start Trust Companies.
Advisors Institutional Services (www.advisorsinstitutional.com), which I support, helps wealth managers, advisors, broker-dealers, banks, law firms, and pension plan administrators create and operate trust companies in South Dakota. This can permit a bank or advisor to replicate both the Sterling and UW Trust company business models.
The firm offers a complimentary special report called Launching a South Dakota Trust Company Guide to Operating Nationwide which is available on-line at (www.advisorsinstitutional.com/s/southdakotareports.asp).
Jerry Cooper, senior editor, The Trust Advisor Blog. Scott Martin and Steven Maimes contributed.
Permalink: http://thetrustadvisor.com/news/uw
America’s Largest Qualified Plan Check Processor to Launch South Dakota Trust Company
Posted by Jerry Cooper in News on November 27, 2009
PIERRE, SD., Nov 27 – PenChecks, Inc. a Southern California-based retirement plan servicing firm was granted a trust charter on November 9th in South Dakota, according to a report recently released by the South Dakota Division of Banking.
PenChecks, Inc., according to its website, is the nation’s largest qualified plan benefit distribution processing organization. It offers “a state-of-the-art, technology-based, affordable, professional and convenient solutions for plan sponsors, institutions and third-party administrators.”
Catherine Macleod, a qualified plan industry specialist told The Trust Advisor Blog, that PenChecks is one of the most recognized names in the retirement plan industry. Most firms such as third party administrators (TPAs) and qualified plan sponsors, like mutual fund companies, use PenChecks for benefit check processing and tax return preparation–similar to the way payroll processing companies work in the payroll industry like ADP and others.
Macleod added, most of their clients either use bank trustees or self-trustee. It makes perfect sense that PenChecks would start its own trust company because many of its clients cannot afford the cost increases that bank’s third-party trustees are charging for serving as trustee for qualified plans. As risks go up in the qualified plan, so do trustee fees, to compensate for the potential losses and claims.
She added, PenChecks will probably find a market for its trust company in two places. The first place would be mutual fund companies that do not want to serve as their own trustee and do not wish to pay the high fees requested by banks.
Its second market would likely be companies that have been serving as their own trustee for their plans who are likely to grow and do not want or feel comfortable serving as trustee themselves. In this case they would likely go to a PenChecks Trust Company for a lower cost all‑in‑one solution.
PenChecks is another example of an integrated growth strategy by a wealth management provider or service organization that believes it can do a better job, and charge less to serve its own client base, rather than outsourcing trustee work to a bank or independent trust company.
PenChecks Trust Company of America is the sixth public trust company to be opened this year in South Dakota; others include First Lawyers Trust Company which was recently approved and Dominion Trust Company which became licensed and operational in July.
As more firms recognize that clients perform an all‑in‑one solution for financial needs more diversified financial and wealth management organizations will be launching their own trust companies in coming months.
Jerry Cooper, senior editor, The Trust Advisor Blog.
Private Trust Company Launches Decline in South Dakota
Posted by Jerry Cooper in News on August 28, 2009
PIERRE, SD., Aug 28 – New private trust company launches have declined in the past two years according to data recently released by the South Dakota Division of Banking. Previously, the South Dakota regulator only reported the name and address on South Dakota Trust Company formations. The new Excel format report, called a credentials roster covers more comprehensive information which includes, if the enterprise is public or private and its launch date.
Private trust companies or family trust companies cater to ultra-high-net-worth individuals with at least $100 million in investable assets. These trust companies which have been set up by families to avoid the necessity of using third-party trust companies and who have special assets such as closely held family businesses, real estate or partnership interests or don’t feel comfortable handing over their assets either to an individual or to a big trust company to manage.
Private trust companies often have boards set up with various committees that enable family members from many generations of branches to be involved in managing the family’s wealth.
Private trust companies launches hit a peak in 2007 with 4 launches and when they were chronicled in a Wall Street Journal article; Wall Street Journal; Matters of Trust: Super-rich Setup Companies. According to the WSJ story, private trust companies have been promoted by private trust company expert John P. C. Duncan, a Chicago lawyer. Duncan reported, in 2007, that the numbers have increased because more trust lawyers have touted their benefits.
TRUST COMPANY TRENDS
South Dakota public trust company start-ups have surged this year. Last month, The Trust Advisor reported an increase in start-ups nationwide including South Dakota. With five launches completed and several other now awaiting filing, 2009 will likely become a record year for the State.
SHIFT TO NEVADA?
Perhaps the reason for the decline in South Dakota is that many trust lawyers are waiting for a new Nevada law to become effective October 1, 2009, Nevada SB-310 which permits private family trust companies to be setup without special licensing and without regulatory capital. Previously, Nevada required private trust companies to have $300,000 of regulatory capital.
Earlier this year, Duncan testified at a Nevada State Senate Hearing in support of SB-310, endorsing higher capital requirements for public institutions and no licensing or capital requirements for private family trust companies.
L. Scott Walshaw, Nevada’s former banking commissioner and regulatory advisor with Garrison Institutional said, “It’s too early to determine that the decline in South Dakota is a definite trend. There is not enough data to statistically validate any conclusions.”
Walshaw added, “Besides the year is not over and there could be ten filings before the end of the year. As for the shift to Nevada no one knows how many new trust companies will be incorporated under SB-310.”
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