HOW STATE TRUST LAWS SHAPE RECRUITMENT

The trust landscape in the US is not uniform – state-level legislation dictates how trusts are administered, how assets are taxed, and how mandatory duties are defined and assigned. This influences the flow of capital, and in turn, the demand for niche talent, with certain specialisms more sought after in different states.

In this article, William Hurlock, Associate Director at Victus Search, examines some of the key differences in how trusts are structured and regulated on a state-by-state basis, and how this shapes the demand for specialised talent.

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“DYNASTY TRUST” FRIENDLY STATES

In most US states, legislation limits the time a trust can exist after the death of a person specified in the trust documents – known as the “rule against perpetuities”. This is commonly set at 21 years. After the beneficiary passes away, the assets have to be removed from the trust within this period, which then subjects them to any applicable wealth transfer taxes. However, a handful of states have abolished or extended this time limit, including South Dakota (abolished), Nevada (fixed at 365 years) and Wyoming (fixed at 1,000 years). As a result, these states have become magnets for multi-generational wealth.

This creates demand for

Professionals skilled in ultra-long-term planning, complex tax modelling, and client relationship management.

DOMESTIC ASSET PROTECTION TRUSTS (DAPTS)

DAPTs are irrevocable, self-settled trusts that enable the creator of the trust to serve as a beneficiary while safeguarding assets from future creditors and lawsuits. Sixteen states in total allow DAPTs, with Ohio and Tennessee having the shortest statute of limitations for creditors (18 months in each state), making them attractive locations. However, state-specific requirements for DAPTs can be complex, and it’s vital that they are structured correctly to ensure regulatory compliance and withstand legal challenges if they arise.   

This creates demand for

Attorneys and administrators with expertise in asset protection strategies, burden-of-proof standards and evolving fraudulent transfer case law.

DIRECTED-TRUST FRAMEWORKS

Directed-trust frameworks represent a significant structural change in trust administration, allowing the traditional duties of a trustee to be split between multiple roles – with different parties managing the investment, distribution, and administration functions. This offers greater flexibility and control for settlors, beneficiaries and their advisors, and opens up the ability to work with independent asset managers and trust companies. The majority of states have enacted some form of directed trust statute. Among them, Delaware, Alaska, South Dakota, Nevada, and New Hampshire are the leading jurisdictions for creating directed trusts and migrating existing trusts to convert them to directed trusts.

This creates demand for

Statutorily-defined roles, including Investment Trust Advisors, Distribution Trust Advisors and Trust Protectors.

DIFFERENCES IN PTC REGULATION

For UNHW families, private trust companies are popular vehicles for managing and preserving their wealth across generations. However, the regulation of PTCs varies widely between states. Particularly lenient PTC statutes, such as those in Wyoming, have fueled a regional boom in family office-run trust companies; however, an increase in regulatory scrutiny is likely to occur at some point. Forward-looking family offices are conscious of the need to onboard specialised talent to anticipate and prepare for any such changes. 

This creates demand for

Compliance officers who can build out KYC/AML programs and internal controls, and prepare for increased regulation.

VARYING STATE TAX TREATMENT

Six of the top ten trust states – Florida, Texas, South Dakota, Nevada, Alaska, and Wyoming – have no state income tax on trusts, creating a powerful incentive for setting up trusts in these jurisdictions. However, there are multiple factors, such as property ownership, shareholdings, and the residence of beneficiaries, that may introduce tax liabilities, including the requirement to pay taxes in multiple states. It’s therefore vital to have access to tax professionals with specific expertise in these types of vehicles to ensure compliance and tax efficiency. 

This creates demand for

Specialised fiduciary accountants (as opposed to generalist CPAs) with expertise in multi-state tax law, nexus rules, and the preparation of composite tax filings.

NAVIGATING NICHE HIRING REQUIREMENTS

Differences in the regulation of trusts shape both the recruitment strategy of companies hiring in this space and the opportunities available for specialised trust professionals. At Victus, we understand the nuances of the US trust sector and, through our extensive network, have privileged access to the niche talent and specialist knowledge needed to address state-level challenges in a competitive hiring market. 

Whichever side of the hiring desk you’re on, we can offer discreet, confidential guidance to help you secure the talent or the role that fits your specific criteria. Contact us today to discuss your requirements.

Tax laws and regulations are complex and subject to frequent change. The information contained in this blog post is provided for general informational purposes only and is not intended to be a substitute for professional advice.