On July 1 of each year, most of the legislation passed in the previous January-March legislative session takes effect, and there are a few items which may be of interest in the financial institution/trust sector.

This year the Governor’s trust task force bill (SB 95) addressed a few procedural items for clarification, including affirmation that electronic signatures could be used on all trust documents excluding wills and codicils and clarifying certain notice provisions in court actions to allow electronic notice. The bill also validates appointment of different trustees for different purposes and allows the exclusion of co-trustees from certain responsibilities. Total return unitrust provisions are updated, and the bill clarifies that a court can reform a trust to fix a scrivener’s error. Finally, the bill also granted the court the power to alter notice provisions in cases where flexibility in notice is needed for certain circumstances or to notice certain persons. Unlike many years when broad changes were made in the trust law, this year’s changes are narrow and focused.

Another law which doesn’t directly affect banks (as they are exempt from the filing and reporting requirements) will require entities (corporations, LLCs, partnerships) who file with the Secretary of State to disclose whether the entity owns ag land and whether the entity has any foreign beneficial owners. (HB 1189) Of course, such entities will most likely be “reporting entities” under the federal Corporate Transparency Act and will need to make FinCen filings after January 1, 2024, so there are some additional requirements from both the state and federal level with which such entities need to be familiar. Any financial institution dealing with such entities should also be familiar with their filing requirements.

In addition to the trust legislation, efficiency through electronic signatures was also promoted in the allowance of electronic signatures when an insurer is transferring a vehicle title by assignment or power of attorney (SB 42). An extensive recodification of money transmitter licenses was enacted, again to make South Dakota law uniform with other states (SB 43). Further modifications were made to the guardianship and conservatorship laws (HB 1240) essentially granting the protected person additional rights to contest the petition and obtain evidence. South Dakota banks and financial institutions under current law may be required to report any exploitation of elders or disabled adults via a suspicious activity report. Clarification of requirement for a living will was made, requiring the declaration to state the declarant’s preferences regarding the provision, withholding or withdrawal of artificial nutrition and hydration. (SB 180)

Finally, the legislature enacted a procedure to allow the owner of leased real property on which a manufactured or mobile home is abandoned to foreclose and sell or dispose of the home. Financial institutions who have properly noted a lien on the manufactured or mobile home are to receive written notice by certified mail so that they may protect their interest. (HB 1108).

While it is difficult to summarize all the legislation to take effect July 1, 2023, it is hoped that this short exposition may be useful for the reader.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.