Usually, people associate Switzerland and the Cayman Islands as places where individuals go to hide their money. However, some Arkansas residents may be surprised to learn that there is a place right here at home where high net worth individuals are hiding their money to keep it shielded during a divorce. This place is South Dakota.
A recent divorce involving a Texas billionaire has fixed the spotlight on laws that many do not know about. According to CNBC, South Dakota is quickly becoming a haven for the wealthy, including the likes of Chinese billionaires and other foreign oligarchs, to establish trusts that protect their assets thatnks to protective trust laws. Such laws can ultimately prevent the assets from becoming marital property in an eventual divorce.
A look into South Dakota’s protective trust laws
Here, Ed Bosarge established numerous trusts in the state. When he changed the beneficiary of the trust away from his wife, the state’s laws afforded him a level of secrecy where he did not have to inform her. Now, the bulk of the couple’s assets are stuck in South Dakota trusts and are virtually untouchable based on the state’s laws. While spouses suffer from this, South Dakota benefits. According to analysts and local politicians, there are hundreds of billions of dollars of assets in the state, and South Dakota reaps fees on every trust that is established. The state has seemingly won the “race to the bottom” in order to attract assets to the state and pad its own coffers.
The effects hidden assets can have in a divorce
In a divorce, this can have serious ramifications for a spouse who thinks that they will be receiving a certain amount throughout the property and asset division process. Oftentimes, it requires a large legal effort to reach these assets, if they can even be reached at all. A family law attorney can help their client investigate where the assets have been moved. They could then mount a legal effort on their client’s behalf to try to recover some of these assets and make them part of the marital estate.