William D. Lipkind (Partner-New Jersey) is co-author of an article on the "New South Dakota Special Spousal Trust" in the July 7, 2016, issue of Leimberg's Estate Planning Newsletter #2433. The new South Dakota statute, effective July 1, 2016, will enable married residents and nonresidents of South Dakota to transfer assets into a special trust, which assets upon transfer will be considered community property under South Dakota law. The primary value of this new statute is to enable settlors of such trusts to obtain a 100 percent income tax basis step-up upon the death of the first settlor to die. According to Bill, "The South Dakota statute, as do the Alaska and Tennessee statutes, gives residents and nonresidents the option to elect that some or all of their property may be held in a trust, which property once transferred into the trust, regardless of whether it was already community property, will become community property for purposes of §1014 (b) (6) of the Internal Revenue Code and held in the trust as community property."
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