What Does “Situs” Mean for a Trust?
In trust planning, situs is generally a jurisdictional question. The simplest way to think about it is:
Which state’s law applies?
That does not necessarily mean the state where the settlor lives, where the trust was signed, or even the state named in the trust document. Those facts may matter, but trust situs can involve a broader analysis of which jurisdiction has the legal connection necessary for its law to govern a particular issue.
The State Named in the Trust Is Usually the Starting Point
A trust document will commonly identify the law intended to govern the trust.
For example, a Utah settlor might create a trust stating that Nevada law applies. That language is important, but it does not necessarily end the inquiry.
If the trust later becomes involved in a dispute, a court may still have to determine whether the selected state’s law governs the particular issue before it.
A Utah divorce case illustrates the point. The trust agreement stated that Nevada law would govern its validity, construction, and effect. But the Utah Supreme Court declined to enforce that choice of law for the issue before it because doing so would conflict with Utah’s strong public policy concerning the equitable division of marital assets. Dahl v. Dahl, 2015 UT 79, 459 P.3d 276, ¶ 27 (Utah 2015).
A governing-law provision matters, but it does not necessarily control every issue involving the trust.
Different Trust Questions Can Be Governed by Different Laws
There may not be one governing-law answer for everything involving a trust.
Different laws may potentially govern issues such as:
- the validity of the trust;
- the interpretation or construction of the trust document;
- the administration of the trust; and
- transfers into the trust, particularly in asset protection planning.
Those questions can sometimes produce different answers.
That is why saying that a trust “has Nevada situs” or “has Utah situs” can oversimplify what is actually happening. The more precise question is often: Which jurisdiction’s law governs this particular issue?
Trust Situs Is Different From Domicile
Situs and domicile are related jurisdictional concepts, but they are not the same thing.
Domicile generally concerns a person’s permanent home and where that person intends to remain or return. Trust situs concerns the jurisdiction connected to the trust and the law governing the relevant trust issue.
A settlor can therefore live in Utah while creating a trust designed to use the law of another state. Whether that other state’s law will actually apply depends on the trust structure, administration, connections to that jurisdiction, and the issue being analyzed.
What Does It Mean to Move a Trust’s Situs?
People sometimes talk about “moving” a trust from one state to another, but changing situs is not necessarily as simple as changing an address or appointing an out-of-state trustee.
The first question is what is actually being changed. The objective might be to change where the trust is administered, which state’s law governs a particular issue, or both.
Those changes can also have important implications for the trustee. A change in situs may affect the law governing the trustee’s duties, including the fiduciary duties the trustee owes in administering the trust.
The steps required—and the legal effect of the change—depend on the trust document, applicable state law, the parties involved, and the reason for the change.
Why Trust Situs Matters
States do not all have the same trust laws.
Jurisdiction can affect issues involving trust administration, asset protection, taxation, trustee powers, modification, and other aspects of sophisticated trust planning.
Situs becomes particularly important when a trust is intentionally designed to use another state’s laws. The state named in the document is only part of the analysis; the trust’s structure, administration, applicable law, and the particular issue involved may all matter.
For that reason, trust situs can be a highly fact-sensitive question requiring careful analysis of both the trust and the jurisdictions involved.
