For the past 30 years, South Dakota has been a bastion of extreme wealth, a place for multimillionaires and billionaires around the world to stash their money in vehicles known as trusts. As the explosive Pandora Papers investigation has exposed, the world’s wealthy employ complex schemes in order to avoid taxation, and the use of trusts is an essential strategy.
Trusts are common tools of wealth management, but they can be misused to foment massive dynastic wealth. For example, in a recent Institute for Policy Studies brief, my colleague Chuck Collins and I detailed how a multimillionaire or billionaire can create a dynasty trust, in which money can grow almost entirely protected from estate and transfer taxes. Trusts are how the family that owns Mars, Inc. has seemingly been able to pass billions on to each generation without losing a chunk of change to taxation.