Several doctrines that shape long-term and creditor-sensitive planning are entirely state-dependent: homestead protection, the rule against perpetuities (RAP), trust decanting, and directed-trust statutes. Situs selection often turns on these.
- Homestead laws protect a primary residence from creditors and can restrict devise; protection ranges from modest dollar caps to unlimited acreage-based exemptions (notably Florida and Texas).
- Florida's constitutional homestead both shields the home from most creditors and restricts devise when a spouse or minor child survives — an outright devise can be invalid.
- Coordinate trust funding with homestead: transferring a Florida homestead to a revocable trust must be done carefully to preserve the exemption and tax benefits.
- The common-law RAP (lives in being + 21 years) has been widely modified: many states adopted the Uniform Statutory Rule Against Perpetuities (USRAP) 90-year wait-and-see period.
- A large group of states abolished or greatly extended the RAP to enable perpetual dynasty trusts (e.g., South Dakota, Nevada, Delaware, Alaska, Wyoming) — a primary driver of trust situs selection.
- Watch the 'Delaware tax trap' (IRC 2041(a)(3)/2514(d)): exercising certain powers of appointment to postpone vesting can cause transfer-tax inclusion — sometimes used intentionally to obtain a basis step-up.
Key takeaways
- Homestead protection and devise restrictions are state-specific and can invalidate an outright devise (e.g., Florida).
- Many states abolished or extended the RAP to allow perpetual dynasty trusts — a core situs driver.
- Decanting and directed-trust statutes provide flexibility to fix and adapt irrevocable trusts; availability and limits vary by state.
Authorities
- Uniform Statutory Rule Against Perpetuities; Uniform Trust Decanting Act; Uniform Directed Trust Act
- Fla. Const. art. X, 4 (homestead); IRC 2041(a)(3) (Delaware tax trap)