Can I Transfer a Management of a Trust to A Corporate Trustee in Another State?
Full Question:
Answer:
The terms of the trust document will govern the appointment of a successor trustee. If the document does not name a successor or procedure for appointing a successor, a court having jurisdiction over the trust will appoint the successor trustee. Similarly, if a trust instrument does not provide a procedure for resignation, a court must approve any resignation. Until a court has approved a trustee resignation, the trustee still has all of the responsibilities (and liabilities) of a fiduciary.
Generally, a trust created in another state may be enforced in SC as long as it complies with the laws of the state where it was created. A foreign corporate trustee has to qualify to do business in SC only if it maintains principal place of administration for a trust in SC. This does not require qualification if the principal place of trust administration is not in SC. Thus, a foreign trustee could be appointed by a SC court and it could move the principal place of administration to the state in which it is organized.
Some states determine domicile of a trust for purposes of state income taxation based on the residency of the trustee or where the administration of the trust occurs. John A. Warnick & Sergio Pareja, Selecting a Trust Situs in the 21st Century, PROB. & PROP. 53, 57-58 (Mar./Apr. 2002). Appointing a trustee who lives in one of those states could subject the trust to state income taxation that might not otherwise exist. We suggest you consult a local attorney or tax professional who can review all the facts and documents involved.
Please see the following SC statute:
§ 62-7-403. Trusts created in other jurisdictions.
A trust not created by will is validly created if its
creation complies with the law of the jurisdiction in which
the trust instrument was executed, or the law of the
jurisdiction in which, at the time of creation:
(1) the settlor was domiciled, had a place of abode, or was
a national;
(2) a trustee was domiciled or had a place of business; or
(3) any trust property was located.