Cross-border asset war enters a new phase as Nevada captures almost twice as many votes as every other jurisdiction in the country put together. What’s the state’s secret? And are the accounts following its fame?
When we asked Trust Advisor readers to name the best state for trust accounts, we were expecting a tight race between the top-tier jurisdictions.
After all, the gap between Nevada, Alaska, South Dakota and Delaware is surprisingly thin from a statutory point of view. But the way the narrowest distinctions are playing out in the court of public opinion is shocking.
According to our numbers, Nevada wins by a landslide.
When they heard, Las Vegas trust company Premier Trust volunteered to explain why they and their clients are so happy with the state. You can sign up for their September 16 webinar HERE. As always, it’s free and should run about an hour.
The numbers add up to a boom
Nevada ended up with 64% of the response to a very simple question: which trust state is best?
Alaska, Delaware and South Dakota –the other names in the traditional bulge bracket – barely scraped up the remaining 36% of the vote between them.
We were expecting a much more balanced result, so I suspect trust officers around the nation will be sneaking into the Premier webinar to see what one of the top firms in Nevada considers the reason the state is so dominant in advisor consciousness right now.
Maybe it just blows down to marketing and tireless promotion. On a deep level, the playing field is roughly level, so each state should get roughly the same respect from the industry.
All four support roughly the same level of protection from creditors, roughly the same favorable tax treatment and support for comparably lengthy “dynastic” trust periods. Nevada often has a tiny edge somewhere, but on the whole it’s too close to really call a winner.
But while Nevada may only capture a slight lead before a rival changes its rules to keep up, trust companies that operate there have become very savvy about communicating their edge while they have it.
And as we know, the basis of long-term success often boils down to the multiplication of the smallest and most transitory edges from month to month, year to year and decade to decade.
Other states may try hard to catch up or challenge whether all wealthy families need or even want every perk in the Nevada trust code, but that’s at best a reactive strategy.
Think of how you interact with your prospects. Do you spend more time telling them all the ways you’re great, or do you focus on explaining why they don’t really want what your fiercest competitors are bragging about?
Maybe the nation’s richest families really think they might have to lean on all the fine points of Nevada’s asset protection environment in their lifetimes. Or maybe they simply want to know the rules are there to protect future generations from a bad choice of spouses, for example.
In any event, it’s a long game that Nevada seems to be winning at the moment.
Picking a runner-up
If Nevada’s blowout performance was the biggest surprise in these numbers, the way the other states stacked up behind it was only a little less revealing about how each of them is getting the competitive message out there.
Alaska batted far above its weight class. The state has two trust companies on the books and as of three weeks ago, the Alaska Trust team runs them both.
Nonetheless, that team has managed on its own to keep Alaska alive as an attractive destination for assets from the Lower 48.
Because it’s the only game in Anchorage, Alaska Trust effectively garnered every vote for Alaska, which comes out to 15% of the total. That’s huge. At best, only a few heavyweights in Nevada could even hope to match that performance.
Matt Blattmachr, a vice president and trust officer at the firm, was thrilled to hear Alaska ranked No. 2.
“We are very excited that Alaska has been chosen as one of the leading jurisdictions by clients throughout the U.S. looking for the most advanced estate planning solutions,” he says.
“We greatly appreciate the support that practitioners and clients throughout the country have given us.”
South Dakota, with its dozens of independent trust companies, paradoxically looks a lot less impressive with its 11% of the vote to split so many ways.
Over the last few years we’ve seen South Dakota institutions become extremely quiet about the benefits their state provides cross-border accounts. It’s still one of the better trust jurisdictions in the country, but it’s hard to put a finger on when exactly it would be the best choice for a given trust.
Arguably a lot of the ways South Dakota excels are behind-the-scenes operational factors. The state obviously shines when it comes to luring trust companies to move their charter or set up shop in its territory. Whether that translates into new accounts remains to be seen.
And then there’s Delaware. With just 10% of the vote, the white-glove standard of the traditional trust industry seems a little defensive as non-conventional competitors keep popping up in far-flung states.
But let’s be realistic here. Delaware’s trust industry barely bothers to market itself because these firms have sheer gravity on their side.
The tiny state has captured close to quadruple its rightful share of the nation’s personal trust assets on a raw state-by-state basis. Per capita, these trust companies are 18 times as successful as their rivals anywhere else.
Given the often-tiny distinction between what a trust can get in Delaware and Nevada, gravity and convenience evidently pushes a lot of dollars toward Wilmington.
Do the distinctions outweigh inertia where your clients are concerned? The Premier Trust team will provide their view on September 16.
Obviously they’re a little biased toward Nevada. That’s why they chose to set up shop in Las Vegas. But if you’d like to hear the secret of their success, you can still register HERE.