Why choose Delaware as the jurisdiction for your trust?
Trusts are highly effective wealth management vehicles that can facilitate the transfer of wealth between generations and help individuals, families and business owners achieve a range of estate and tax planning goals. One of the most basic and essential decisions for individuals and families seeking to establish a trust is choosing the state where the trust will be administered. Depending on the jurisdiction chosen, there can be significant implications for the settlor and beneficiaries as to how the trust is administered and the potential tax savings that can be realized over time. Delaware is a jurisdiction that has long been a popular choice among grantors.
Delaware is known as the first state. Of course, this nickname refers to his position in line to ratify the American Constitution. However, Delaware has also been at the forefront of trust law since the turn of the 20th century. Many states, including Alaska, Nevada, and South Dakota, have followed in Delaware’s footsteps to create flexible and helpful environments for funders. Yet, the original value proposition created by Delaware remains due to its reputation as a jurisdiction with a rich history of well-developed and flexible tax and trust laws.
Delaware began building its trust infrastructure in the early 20th century, and its state legislature continues to update and adjust trust laws to accommodate a variety of new challenges. The state legislature, governor, banking institutions, and legal community are working together to propose and pass new trust legislation to ensure Delaware maintains its status as a premier trust jurisdiction. Unlike many jurisdictions that are newer to the trust scene, Delaware has a strong community of seasoned professionals, including accountants, lawyers, and banking professionals, who specialize in trusts.
Additionally, Delaware has backed up its laws with a competent and efficient judicial structure. All matters of trust administration and trust interpretation are exclusively within the jurisdiction of the Delaware Court of Chancery and, on appeal, the Delaware Supreme Court. The Delaware Court of Chancery is a court of equity as opposed to a court of law. In other words, the Delaware Court of Chancery is a non-jury trial court and cases are based on court decisions.
Also, because the Court of Chancery focuses exclusively on fiduciary and commercial matters, it does not experience the same backlog as many other state court systems. As a result, dispute resolutions are often handled more efficiently and quickly by professionals who have experience in the field. In addition, Delaware has ruled favorably on a number of trust matters, including asset protection trusts and directed trusts. These decisions can help individuals plan with more comfort and confidence.
While selecting a trust jurisdiction is not a one-size-fits-all decision, as a trust law pioneer with developed case law and a cooperative legislative environment, Delaware offers a variety of unique advantages over other trust-friendly states. trusts. To find out if Delaware is the right choice for your situation and goals, contact your CIBC Private Wealth Management advisor or visit CIBC Delaware Trust Company Resource Page.