What the rule says
Delaware has been the leading trust situs jurisdiction in the United States for over a century. Delaware's comprehensive trust framework, codified across multiple chapters of Del. Code tit. 12, provides distinctive features that have made Delaware the destination for trust planning by high-net-worth families nationwide.
Core trust features
#### Directed trust statute (Del. Code tit. 12, § 3313)
Delaware was a pioneer in the directed trust statute, allowing separation of trustee functions:
- Investment trustee — manages investment decisions - Distribution trustee — manages distribution decisions - Administrative trustee — handles trust administration
This separation allows trustees to specialize and reduces overall trust costs while maintaining fiduciary protections.
#### Decanting authority (Del. Code tit. 12, § 3528)
Delaware allows decanting — transferring assets from one trust to another to modify trust provisions. This provides flexibility to update trust terms without court approval.
#### Domestic Asset Protection Trust (Del. Code tit. 12, § 3570 et seq.)
Delaware's Qualified Dispositions in Trust Act establishes the Delaware DAPT framework with:
- 4-year statute of limitations for fraudulent transfer challenges - Strong creditor protection after the limitation period - Specific procedural requirements for valid creation
#### Perpetual trusts for personal property
Delaware allows trusts holding personal property to continue indefinitely (no rule against perpetuities for personal property in trust). For real property, Delaware applies a 110-year limit.
#### Income tax efficiency
Delaware imposes no state income tax on trust income when:
- The trust has no Delaware resident beneficiaries - The trust does not have Delaware-source income
For most out-of-state high-net-worth families using Delaware trusts, state-level income tax on trust income is effectively eliminated.
Comparison to other trust situs jurisdictions
| State | Perpetuity | Income Tax (Trust) | DAPT | Notes | |-------|------------|--------------------|------|-------| | Delaware | No limit (personal); 110-yr (real) | No (non-resident) | Yes | Most established | | Nevada | 365 years | No | Yes | Strong DAPT | | Alaska | No limit | No | Yes | First DAPT state | | South Dakota | No limit | No | Yes | Modern framework | | New Hampshire | No limit (since 2004) | No | Yes | NE option | | Wyoming | 1,000 years | No | Yes | Less established | | Florida | 360 years | No | No | No DAPT |
Delaware's framework is distinguished by:
- Most established trust law and case law of any US jurisdiction - Sophisticated Court of Chancery for trust disputes - Mature Delaware trustee industry - Comprehensive statutory framework spanning over 100 years of evolution - Strong out-of-state recognition of Delaware trust law
Why Delaware leads
Delaware's leadership reflects:
1. Court of Chancery. Delaware's specialized equity court has decided trust cases for over 200 years, producing the most extensive body of trust case law in the country. 2. Trustee infrastructure. Major banks and trust companies maintain specialized Delaware trust offices. 3. Statutory innovation. Delaware has been the first or among the first states to adopt many modern trust features (directed trusts, decanting, DAPT, etc.). 4. Cross-state respect. Delaware trust law is widely respected and applied by courts in other states.
What you can do about it
For high-net-worth individuals considering trust planning:
- Engage Delaware counsel. Trust situs planning requires specialized expertise. - Establish substantial Delaware nexus. Independent Delaware trustee, Delaware governing law, Delaware property if possible. - Coordinate with overall estate planning. Trusts work alongside will, POA, etc. - Account for tax implications. Federal tax planning is the primary consideration; Delaware state tax efficiency adds incremental value.
For non-high-net-worth individuals:
- Delaware trust situs is typically inappropriate. The complexity and cost are not warranted for modest estates. - Standard estate planning is more appropriate for most families.
Who this affects most
Delaware's trust situs framework is most consequential for:
- High-net-worth families (typically $10M+) seeking sophisticated trust planning - Out-of-state residents establishing Delaware-situs trusts - Estate planners coordinating advanced wealth planning - Family offices managing intergenerational wealth
Delaware is the most established trust jurisdiction in the United States. Combined with no state estate tax, Delaware offers comprehensive trust planning advantages that are particularly valuable for high-net-worth families. The framework requires specialized expertise; it is not a DIY tool.