S.D. Codified Laws § 55-1-32

Current through the 2024 Legislative Session

Section 55-1-32 - Alter ego-Pierce the veil, dominion and control claims

Pierce the veil and dominion and control claims by a party are, in essence, a variation of the alter ego common law doctrine. This section covers all of these types of claims.

In the event that a party brings an action against a trustee, beneficiary, trust advisor, or trust protector under an alter ego claim, none of the following factors, alone or in combination, may be considered as resulting in the alter ego theory being applied to a trustee or the person who is claimed to be the alter ego:

(1) The settlor or a beneficiary serving as a trustee or a co-trustee as described in § 55-1-28;

(2) The settlor or a beneficiary holds an unrestricted power to remove or replace a trustee;

(3) The settlor or a beneficiary is a trust administrator, a general partner of a partnership, a manager of a limited liability company, an officer of a corporation, or any other managerial function of any other type of entity, and part or all of the trust property consists of an interest in the entity;

(4) A person related by blood or adoption to the settlor or a beneficiary is appointed as trustee;

(5) The settlor's or a beneficiary's agent, accountant, attorney, financial advisor, or friend is appointed as trustee;

(6) A business associate is appointed as a trustee;

(7) A beneficiary holds any power of appointment over any or all of the trust property;

(8) The settlor holds a power to substitute property of equivalent value;

(9) The trustee may loan trust property to the settlor for less than a full and adequate rate of interest or without adequate security;

(10) The distribution language provides any discretion;

(11) The trust has only one beneficiary eligible for current distributions;

(12) A beneficiary serving as an investment trust advisor, as the role is defined in § 55-1B-1;

(13) Isolated occurrences where the settlor has signed checks, made disbursements, or executed other documents related to the trust as a trustee, when in fact the settlor was not a trustee;

(14) Making any requests for distributions on behalf of beneficiaries;

(15) Making any requests to the trustee to hold, purchase, or sell any trust property; or

(16) A beneficiary serving as a trust protector or a trust advisor.

SDCL 55-1-32

SL 2007, ch 280, §9; SL 2009, ch 252, §6; SL 2012, ch 233, §20; SL 2023, ch 161, §3.

Amended by S.L. 2023, ch. 161,s. 3, eff. 7/1/2023.