Why Private-Equity Millionaires Love South Dakota

By  Miriam Gottfried
Dec. 26, 2025 10:00 pm ET

A decade ago, a successful private-equity dealmaker left his firm to start a new one. He asked his financial adviser to help him structure the endeavor in a tax-efficient way.

The executive lived in California, but his adviser recommended that he open a South Dakota trust and give it his share of the profits from his fund’s future deals. The trust has since received over $100 million in distributions, and the executive hasn’t paid a dime in state taxes.