Where Wealthy Families Prefer to Set Up Trusts

Picking where to establish a family trust used to be a niche technical decision left to lawyers and tax advisers. Now, it’s a strategy question families set alongside where to base a family office, where to bank, and how to educate the next generation. The jurisdiction you choose sets the tone for governance, tax outcomes, privacy, and how easy or hard it is to make decisions together over time. I’ve helped families set up trusts across five continents, and the ones who get it right rarely start by asking “What’s the lowest tax?” They ask, “Which place gives us the stability, flexibility, and people we want to work with for decades?”

Why Jurisdiction Choice Matters

Trusts are creatures of the law that creates them. Two identical trust deeds can behave very differently depending on the governing law, the local courts, and the regulation of trustees. That plays out in several practical ways:

Control and flexibility: Can you appoint a protector? Can you use a directed trust where the trustee follows an investment committee? Can you “decant” to a new trust without a court order? These are all jurisdiction-driven.

Duration: Some places allow perpetual or dynasty trusts. Others limit how long a trust can last.

Tax stance: Reputable “tax neutral” jurisdictions don’t add local taxes that distort the family’s outcomes. That’s not the same as tax evasion—it’s about not layering extra tax on top of what beneficiaries already owe at home.

Asset protection and family law: Will local “firewall” statutes resist foreign heirship or matrimonial claims? How do courts treat fraud-on-creditor arguments?

Privacy and reporting: Confidentiality varies. So do disclosure duties under FATCA, CRS, and beneficial ownership rules.

Reputation and access: Banks, investment houses, and counterparties will treat a Cayman or Jersey trust differently from an obscure location. Perception matters.

Practicality: Time zone alignment, language, trustee quality, cost, and regulatory predictability all affect day-to-day operations.

A trust is not a transaction—it’s a governance system for assets and relationships. The legal foundation you pick will either support that system or fight it.

Key Criteria Families Use to Compare Jurisdictions

When we run jurisdiction selection workshops with families, we rate places across a handful of practical dimensions:

Rule of law and courts: Specialist judges, predictable case law, efficient procedures, appeal avenues.

Legislative flexibility: Directed trusts, reserved powers, decanting, non-charitable purpose trusts, modern drafting options.

Duration: Ability to run a long-term or perpetual “dynasty” structure.

Trustee ecosystem: Depth and quality of regulated trust companies, availability of private trust companies (PTCs).

Asset protection: Firewall statutes, clear limitations periods, conflicts of law certainty.

Tax neutrality: No local taxation on trust income/gains for non-residents; no stamp duties on trust transactions.

Privacy: Confidential registers vs public access; court file sealing; data protection.

Regulatory environment: Proportionate, reputable oversight that global banks respect.

Cost and speed: Setup and annual fees, licensing or registration friction, timeline to operational readiness.

Banking and investment access: Location’s acceptance by global banks and custodians; connectivity with fund domiciles.

Family alignment: Time zone, language, cultural comfort, reputational profile with the family’s peer set.

Where Wealthy Families Commonly Set Up Trusts

There is no single “best” jurisdiction. There are clusters that lead for different reasons and regions.

Leading US Trust States: South Dakota, Delaware, Nevada, Alaska, Wyoming, New Hampshire

High-net-worth US families—and increasingly international families with US connections—often favor several US states with modern trust statutes. Common advantages include directed trusts, long or perpetual duration, no state income tax on trust income for non-residents, decanting flexibility, and privacy features.

South Dakota

Strengths: Perpetual trusts, strong directed trust statutes, top-tier decanting, no state income tax, sealed trust court records, robust privacy protections, efficient private trust company regime.

Insider note: South Dakota’s court system has leaned trust-friendly with well-trained judges and efficient processes. Many family offices pick South Dakota for governance and move investment custody elsewhere if they wish.

Delaware

Strengths: Long-duration trusts (up to 110 years or more depending on assets), directed trusts via “advisers,” sophisticated Chancery Court with deep corporate/trust precedent, decanting, and well-developed trustee ecosystem.

Insider note: Delaware remains attractive for families with significant operating company holdings, given its corporate law pedigree.

Nevada

Strengths: Perpetual trusts, directed trust structure, self-settled spendthrift trust (DAPTs), no state income tax on accumulated trust income, strong privacy around trust records.

Caution: Courts in other states can challenge Nevada DAPTs when a beneficiary’s home state has public policy against them.

Alaska

Strengths: Early adopter of self-settled asset protection trusts, long duration, directed trusts.

Note: Popular with asset protection-oriented planners, though practical adoption by banks and investment managers can be a bit narrower than Delaware or South Dakota.

Wyoming

Strengths: Quiet statutes, no state income tax, directed trusts, privacy-friendly corporate regime (useful for underlying entities).

Trend: Becoming more popular for families holding digital assets due to progressive views on digital property and DAOs.

New Hampshire

Strengths: Strong decanting, modern trust code, trust protector statutes, favorable for private trust companies.

Appeal: Smaller but respected, with an emphasis on governance flexibility.

Why US states appeal:

For US families, state income tax savings and dynasty planning are major drivers.

For non-US families, the US offers respected courts and banks, plus a quirk: the US hasn’t signed onto CRS (the global automatic exchange of account information), though FATCA applies for US taxpayers. That can increase privacy—but it raises perceptions and bank compliance sensitivities. Good advisers treat this carefully to avoid reputational risk.

Key watch-outs:

Federal tax issues for non-US persons holding US assets (estate tax exposure) must be handled with blockers or structuring.

Cross-border reporting duties (e.g., US Forms 3520/3520-A) for US connections.

Conflicts of law: Other states may not respect self-settled asset protection trusts.

Crown Dependencies: Jersey, Guernsey, Isle of Man

Jersey and Guernsey consistently sit at the top of the list for non-US families seeking stability, high-quality trustees, and sophisticated courts. The Isle of Man is similar, with a slightly different regulatory flavor.

Common strengths:

Trust-friendly legislation: Directed trusts, reserved powers, robust firewall statutes, non-charitable purpose trusts, flexible perpetuity rules (many allow trusts to run indefinitely).

Courts and judges: Specialist commercial divisions with experience in complex trust disputes.

Professional depth: Many of the world’s most experienced trust companies and administrators sit here.

Tax neutrality: Properly structured, no local tax on non-resident trusts.

Privacy: Beneficial ownership of companies is not fully public; trust registers exist but aren’t generally publicly accessible; information is shared with authorities upon lawful request.

Insider perspective:

I often see Jersey used when families want multi-generational dynasty planning with a high probability of predictable court enforcement. Guernsey is equally strong and sometimes preferred for boutique PTC or investment governance setups.

Considerations:

Banks and funds: Excellent access to London and European finance hubs.

Compliance: Robust standards that top-tier counterparties respect, but you’ll complete more diligence—a good thing for longevity.

Caribbean Leaders: Cayman Islands and British Virgin Islands (BVI)

Cayman and BVI are synonymous with global finance for a reason: they combine robust common law, sophisticated financial industries, and flexible legislation.

Cayman Islands

Strengths: STAR trusts (purpose trusts that can benefit persons and/or purposes), flexible for philanthropic and commercial trusts, deep fund and banking market, polished regulator.

PTCs: Cayman offers a well-trodden path for private trust companies with clear regulatory frameworks.

Use cases: Families building trust structures integrated with fund holdings, or those seeking purpose-oriented trusts (e.g., long-term stewardship of a mission).

British Virgin Islands (BVI)

Strengths: VISTA trusts (Virgin Islands Special Trusts Act) for holding shares in underlying companies without trustee interference in management—ideal for entrepreneurs who don’t want a trustee second-guessing operations.

PTCs: Accessible regime for family-controlled PTCs.

Consideration: VISTA trusts solve a very specific problem—keeping trustees from meddling in a family business—while maintaining trust oversight.

Considerations for both:

Courts and case law: Consistent with English common law; final appeals go to the Privy Council in London for many cases—a strong rule-of-law signal.

Reputation: Blue-chip institutions are comfortable with Cayman; BVI is widely used for holding companies and increasingly normalized for trusts, especially with VISTA.

Singapore and Hong Kong

Asia’s wealth hubs have leaned into trust business, pairing modern law with strong banking networks.

Singapore

Strengths: MAS-regulated trust companies, sophisticated private banking, reliable courts, stable politics, excellent time-zone for Asian families.

Tax: Trusts for non-resident settlors and beneficiaries can achieve tax neutrality on foreign-sourced income under specific regimes, if structured correctly. Singapore is pragmatic about substance and governance.

Use cases: Families with assets or beneficiaries across Asia; those who want their trustee in the same working day to coordinate with a family office.

Hong Kong

Strengths: Updated Trustee Ordinance provides flexibility (reserved powers, extended perpetuity periods), strong courts, access to Chinese and global banking.

Considerations: Families sometimes weigh political/reputational perceptions; many still select Hong Kong successfully, but governance planning is crucial.

Insider tip:

Singapore often wins when families want a hub for both the trust and the family office. The regulator expects real governance; it’s a good fit for families serious about process, not just paperwork.

Liechtenstein, Switzerland, and Continental Europe

Liechtenstein

Strengths: Both trusts and foundations, highly flexible property law, experienced fiduciaries, robust asset protection elements, and proximity to Swiss banking.

Use cases: Continental European families comfortable with civil law concepts or those seeking a foundation-like approach.

Switzerland

Context: Switzerland recognizes trusts under the Hague Convention, though it does not currently have its own trust law in force. Swiss fiduciaries administer Jersey, Guernsey, Cayman, or Liechtenstein law trusts.

Why use it: The trustee talent pool and banking connectivity are excellent; many families prefer Swiss-based service providers even if the trust is governed by Jersey or Cayman law.

Other EU jurisdictions

Ireland, Luxembourg, and Malta have trust recognition frameworks to varying degrees. They are less commonly used for global private family trusts than for funds or corporate holding, but can suit specific needs.

Middle East: Dubai and Abu Dhabi (DIFC and ADGM)

DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) offer English-law-based trust and foundation regimes, independent common-law courts, and strong connectivity to regional family offices.

Strengths: Familiar legal environment for common law users; ability to pair with local banking and on-the-ground governance.

Use cases: Middle Eastern families who want local time zone, regional reputation, and alignment with philanthropic or Sharia-compatible planning, often via foundations alongside trusts.

Asset Protection Specialists: Cook Islands and Nevis

Cook Islands and Nevis are renowned for aggressive asset protection features: short limitation periods for creditor claims, high standards of proof, and protective statutes.

Practical note: These jurisdictions can attract scrutiny and higher banking friction. Some families pair them with a mainstream jurisdiction for administration, or use them only when protection risks justify the trade-offs.

What Features Wealthy Families Prioritize

After the “where,” the “what” matters—families increasingly build governance into the trust design.

Directed trusts: Separate the roles. A trustee handles administration, an investment committee directs investments, and a distribution committee or protector oversees beneficiary decisions. Delaware, South Dakota, Nevada, Jersey, and others handle directed trusts well.

Trust protectors: A protector can remove/appoint trustees, approve key actions, or even amend administrative terms. Overuse or excessive settlor control can risk sham arguments—balance is key.

Reserved powers: Allow a settlor to keep certain powers (e.g., to change beneficiaries or investment managers). Too much control undermines the trust; reputable jurisdictions draft clear boundaries.

Decanting: Move assets to a new trust with modern terms without a court order. South Dakota, Nevada, New Hampshire, and others have strong decanting statutes; Jersey and Guernsey offer mechanisms too.

Dynasty planning: Perpetual or very long duration trusts avoid forced sell-downs and sustain compounding. Popular in South Dakota, Nevada, Jersey, and Cayman.

Purpose and “mission” trusts: Cayman STAR and non-charitable purpose trusts in Jersey/Guernsey can embed mission, philanthropy, or stewardship of family assets beyond simple beneficiary distributions.

Private trust companies (PTCs): A family-controlled entity acts as trustee for one or a few family trusts. Cayman, BVI, Jersey, Guernsey, Singapore, and some US states are particularly PTC-friendly. PTCs put governance closer to the family while maintaining fiduciary discipline.

Tax and Reporting: What Smart Families Get Right

The best structures aim for tax neutrality and compliance, not tax magic. Key principles:

Align tax residence: The trust’s governing law and trustee location should not create unexpected tax residence in a high-tax country. Work through attribution rules (e.g., settlor-reserved powers can make a trust tax “transparent” in some countries).

Understand US-specific rules:

US grantor trusts: Income taxed to the settlor. Useful for estate planning and simplicity for US families.

Non-grantor trusts: Separate taxpayer status; distributions to US beneficiaries can trigger the “throwback” tax on accumulated income—model cash flows carefully.

Non-US settlors holding US assets: Watch for US estate tax. Use blockers for US real estate and certain financial assets.

CRS and FATCA:

CRS: Most jurisdictions automatically exchange financial account information with home tax authorities. The US is not a CRS participant but has FATCA (focused on US taxpayers). Relying on this asymmetry purely for opacity is a reputational and banking risk. Banks scrutinize structures that look like CRS-avoidance.

Beneficial ownership and trust registers:

UK and EU regimes require certain trusts to register and disclose details to authorities, with potential access for “legitimate interest” requests.

Jersey/Guernsey/IoM maintain central registers with controlled access. Check current rules—they evolve.

Economic substance:

Corporate entities under a trust may need local substance (directors, premises, employees) to avoid tax challenges in various jurisdictions.

Double-tax pitfalls:

Cross-border beneficiaries can cause the same trust income to be taxed multiple times if timing and character aren’t managed. Use beneficiary tax calendars and plan distributions accordingly.

In my files, the most expensive mistakes were made by families who optimized for tax but ignored beneficiary residency. The fix wasn’t legal wizardry; it was calendar discipline and distribution planning.

Case Profiles: Matching Families to Jurisdictions

US family with multi-state footprint and tech liquidity

Aim: Long-term compounding without state income tax; keep investment control in a committee; protect from divorces and creditor risk.

Fit: South Dakota directed dynasty trust with a private trust company, investment committee seated across states. Keep underlying LLCs in Delaware for operating agreements and courts. Distributions planned to minimize throwback issues for any future non-US beneficiaries.

Latin American family with an operating company and second homes in Europe

Aim: Keep trustee from meddling in the business; build family governance; be bankable at Tier 1 institutions.

Fit: BVI VISTA trust to hold the operating company shares, coupled with a Cayman or Jersey PTC for broader assets. Governance committees include next-gen members and outside investment professionals. Banking across Miami, Zurich, and Singapore.

Asian family with heirs studying and working in multiple countries

Aim: Time zone alignment, strong banks, privacy, and mission-oriented giving.

Fit: Singapore trust with a MAS-regulated trustee; parallel Cayman STAR purpose trust for philanthropic mission. Clear distribution policies linked to education, entrepreneurship grants, and stewardship roles. Strong reporting processes for CRS.

Private Trust Companies: When Control and Culture Matter

PTCs are a favorite among families with complex assets or a strong view on investment philosophy.

Benefits:

Control: Board seats for family members and trusted advisers.

Continuity: Less key-person risk than relying on a single corporate trustee’s relationship manager.

Alignment: Investment and distribution committees can include independent experts but remain anchored to family values.

Jurisdictions that handle PTCs well:

Cayman: A streamlined registered (not fully licensed) PTC regime for single-family use.

BVI: Exemptions for PTCs not offering services to the public, with a requirement to use licensed administrators—keeps standards up without overregulation.

Jersey and Guernsey: PTCs often structured as non-charitable purpose trusts; managed by regulated trust company businesses for oversight.

Singapore: MAS oversees trust companies and has a regime for PTC formations overseen by licensed trust companies; substance expectations are higher.

US states: Some allow family trust companies with state-level oversight; South Dakota and Wyoming stand out.

Common mistakes to avoid with PTCs:

Treating the PTC as a rubber stamp. Regulators and courts expect real governance: minutes, policies, conflicts management.

Forgetting cross-border director risks. A director in a high-tax country can accidentally pull the PTC’s tax residence there.

Skimping on insurance. Fiduciary liability cover and D&O insurance aren’t optional.

Asset Protection: What Actually Works

Asset protection isn’t a logo; it’s a layered practice.

Spendthrift provisions and discretionary distributions are baseline features that protect against most routine creditor claims and beneficiary misbehavior.

Self-settled asset protection trusts (DAPTs) in US states like Nevada and South Dakota provide enhanced protection, but courts in non-DAPT states can ignore them for residents of those states. Bankruptcy law also looks back up to 10 years for transfers to self-settled trusts.

Offshore asset protection jurisdictions (Cook Islands, Nevis) are stronger on paper but can limit banking options and elevate reputational risk. They work best when the family has genuine risk (e.g., professional liability) and is comfortable with trade-offs.

Timing is everything. Transfers after a claim arises are vulnerable almost everywhere. Good protection is pre-emptive and backed by real business purpose and planning documentation.

Governance and Family Dynamics: Build for Decisions, Not Documents

The best trust jurisdictions enable good governance. Use that flexibility:

Clear letters of wishes: Explain values, purposes, and priorities. Avoid micromanaging distributions; set principles.

Committees with independence: One or two independent committee members can transform distribution decisions from “parental” to principled.

Pathways for next-gen involvement: Board observer roles, investment committee internships, and education budgets tied to learning milestones.

Regular trustee reviews: A five-year formal review cycle keeps structures aligned with family evolution.

I’ve watched well-drafted governance turn sibling rivalries into productive co-stewardship. It’s not magic—it’s structure plus clarity.

Privacy and Transparency: Find Balance

Families want privacy, not secrecy. The two are different.

Jurisdictions with sealed court files (e.g., South Dakota) and non-public trust registers (e.g., Jersey/Guernsey) provide privacy while cooperating with legitimate authority requests.

The US’s non-participation in CRS raises privacy, but banks now screen harder for perceived CRS-avoidance. Document legitimate purposes and keep compliance airtight.

Public register trends ebb and flow. Some countries have rolled back fully public registers after court challenges. Assume disclosure to authorities and regulated counterparties is a given; plan reputationally for leaks.

Costs, Timelines, and Practicalities

Budgeting ranges vary widely, but a realistic ballpark for professional-grade setups:

Simple single-jurisdiction trust with corporate trustee:

Setup: $15,000–$50,000 depending on complexity and jurisdiction.

Annual: $10,000–$40,000 for trustee/admin, plus audit if needed.

Private trust company structures:

Setup: $75,000–$250,000+ including legal, licensing/registration, governance policies, and initial board formation.

Annual: $50,000–$200,000+ depending on substance, directors, and compliance oversight.

Timelines:

Standard trust: 2–6 weeks if decisions are made and diligence is smooth.

PTC regime: 2–4 months, longer in Singapore or when banking is complex.

Banking:

Account opening can be the long pole. Pre-qualify banks based on asset types (e.g., private markets, digital assets), KYC comfort, and jurisdictions of beneficiaries.

Spend where it matters: governance design, tax modelling across beneficiary jurisdictions, and bank relationship management. Saving $10,000 on setup and losing six months to a declined account opening is false economy.

Common Mistakes—and How to Avoid Them

Chasing tax without mapping beneficiaries: A trust that saves tax for the settlor but punishes distributions to children in different countries is a time bomb. Build a beneficiary tax matrix and distribution calendar.

Over-reserving powers to the settlor: Too much retained control risks sham allegations and adverse tax treatment. Use protectors and committees instead.

Ignoring situs of assets: Holding US real estate directly in a non-US trust can trigger US estate tax for non-US persons. Use proper holding structures.

Assuming asset protection means invincible: Transfers made after claims arise are vulnerable. Don’t oversell protection to family members; teach prudent behavior.

Picking obscure or tainted jurisdictions: Reputational downside can outweigh any technical advantage. Stick with places your banks and auditors respect.

Poor trustee fit: Cheapest isn’t best. Evaluate trustee bench strength, turnover, and responsiveness. Meet the actual team, not just the sales partner.

No plan for migration: Good deeds include power to change governing law, appoint new trustees, or decant. The world changes; your trust should be able to adapt.

Step-by-Step: How to Choose the Right Jurisdiction

Define purpose and scope

What are you trying to achieve? Wealth preservation? Education? Business succession? Philanthropy? Write it down.

Inventory assets: public markets, private businesses, real estate, funds, digital assets, art. Note jurisdictions and liquidity.

Map people and tax footprints

Settlor and beneficiaries’ current and likely future residencies.

Model distributions under those tax regimes. Identify throwback, attribution, or exit charges.

Shortlist jurisdictions based on fit

Pick 3–4 that score well on rule of law, flexibility, banking acceptance, and time zone.

Consider directed trust and PTC options if governance is a priority.

Frame the governance model

Decide on trustee type (corporate trustee vs PTC), committees, protector, and decision rights.

Draft a letter of wishes reflecting values and guardrails.

Test bankability

Pre-discuss with two or three banks or custodians. Validate KYC requirements, asset class support, and CRS/FATCA handling.

Compare legal terms and costs

Get term sheets for trust deeds in each jurisdiction, including decanting, protector powers, and duration.

Budget setup and annual costs—including directors, insurance, and audits.

Decide and document

Choose the jurisdiction and trustee. Finalize deed, governance charters, committee composition, and compliance calendars.

Implement with momentum

Open bank and custody accounts. Transfer assets methodically to avoid stamp duties or tax surprises.

Set an onboarding session with beneficiaries to explain the structure and expectations.

Review and adapt

Schedule a 12–18 month check-in post-launch, then every 2–3 years or after life events (marriage, divorce, births, relocations).

Emerging Trends to Watch

US trusts for non-US families: The mix of strong courts and non-CRS status keeps drawing interest. Expect ongoing regulatory attention and bank-level diligence to continue rising.

Asia-centric governance: Singapore’s role as a family office hub is strengthening trust adoption, with MAS emphasizing substance and real decision-making onshore.

Purpose-built structures: STAR and purpose trusts are gaining traction for philanthropic missions, legacy assets, and multi-family cultural institutions.

Digital assets: Wyoming, Singapore, and select trustees in Jersey and Switzerland are developing policy frameworks for safekeeping, key management, and valuation. Families should design bespoke policies before funding trusts with crypto.

Transparency equilibrium: Expect more targeted access to trust data by authorities while courts continue to push back on fully public exposure without safeguards. Families need to plan for responsible disclosure, not impenetrability.

UK reforms and non-dom migration: Changes to remittance and domicile regimes can alter planning for UK-connected families. Flexibility to migrate trusts and shift governing law becomes even more valuable.

Quick Comparisons: How Jurisdictions Stack by Use Case

Long-run dynasty with strong governance

Best bets: South Dakota, Delaware, Jersey, Guernsey, Cayman

Entrepreneur with operating company control concerns

Best bets: BVI (VISTA), paired with Cayman or Jersey PTC

Asia-based family with regional banking

Best bets: Singapore, Hong Kong

Strong asset protection emphasis

Best bets: Cook Islands/Nevis (with reputational caveats), South Dakota/Nevada (balanced approach)

Philanthropy and mission

Best bets: Cayman STAR, Jersey/Guernsey purpose trusts, plus Liechtenstein foundations if a foundation model fits

Private trust company center of gravity

Best bets: Cayman, BVI, Jersey, Guernsey, Singapore, South Dakota/Wyoming

Practical Examples of Governance Clauses That Work

Distribution policy with milestones: “Education support up to X per year at accredited institutions; entrepreneurship grants up to Y subject to mentor oversight; matching charitable gifts up to Z.”

Investment committee remit: “Authorize private market exposures up to 35% NAV; risk limits per asset class; independent chair rotates every three years; conflicts policy with pre-clearance for co-investments.”

Protector scope: “Power to remove and appoint trustees; veto on changes to governing law; no power to direct distributions.”

Decanting trigger: “If tax or regulatory changes adversely affect beneficiaries, trustee shall consider decanting to a new trust with substantially similar dispositive provisions.”

These are simple examples, but they turn values into operations.

Final Pointers from the Field

Meet the people, not just the jurisdiction. The best laws fall flat with the wrong trustee team.

Document your “why.” When banks and regulators review, a clear purpose statement eases the path.

Manage expectations. Trusts are not ATMs. Teach beneficiaries the cadence and rationale of distributions.

Keep optionality. Include powers to migrate the trust, change law, and swap trustees. The world shifts; give yourself room to adapt.

Treat the first year as a build phase. Expect to refine reporting, committee workflows, and bank mandates. Don’t judge the structure on month one.

If you start with purpose, choose jurisdictions that back your governance goals, and keep compliance tight, your trust stops being a legal contraption and becomes an engine for your family’s long-term plans. The “where” matters—but it matters most when it supports how your family actually makes decisions, grows capital, and lives its values.