Updated October 8, 2026. Quick answer: Not by default. South Dakota is a common law state, but spouses can opt in with a special spousal trust: the property goes into a trust “expressly declaring in the trust that the property is community property” (SDCL chapter 55-17). The IRS lists nine community property states.
South Dakota community property at a glance
| Item | What the documents say |
|---|---|
| Regime | Common law; opt-in community property trust |
| At divorce | Default: equitable division of property of either or both spouses (SDCL 25-4-44). In a special spousal trust the spouses may agree on disposition (SDCL 55-17-9) |
| At a spouse’s death | Default: an elective share of the augmented estate (SDCL 29A-2-202). In a special spousal trust each spouse’s interest is fifty percent unless the trust says otherwise (SDCL 55-17-3) |
| Federal basis at the first death | Open: SDCL 55-17-5 treats a special spousal trust as one established under state community property laws for 26 U.S.C. 1014(b)(6), but IRS Publication 555 does not address the federal treatment of the election in this state’s trust |
| Source | South Dakota Legislature (sdlegislature.gov Statutes API); IRS Publications 551 and 555; 26 U.S.C. 1014 |
What the South Dakota statutes say
South Dakota’s opt-in is chapter 55-17 of the Codified Laws, the special spousal trust. The legislature’s own statutes database is the source for this page. One or both spouses transfer property to a trust that says in so many words that the property is community property.
Property that another jurisdiction already classified as community property can move in: SDCL 55-17-5 says it “retains its character as community property while in the trust”. The chapter’s latest amendment line cites a 2026 session law, chapter 198; the archived text does not show what that law changed.
How the opt-in trust works in South Dakota
- The trust is created by transferring property to it and “expressly declaring in the trust that the property is community property” (SDCL 55-17-1 and 55-17-3).
- The statute requires that “at least one trustee is a qualified person”, and “The trust must be signed by both spouses.” (SDCL 55-17-1).
- A qualified person is a South Dakota resident, defined in SDCL 55-3-41 as one who “resides in this state, whose true and permanent home is” South Dakota, or an in-state trust company or bank.
- Unless the trust says otherwise, “each spouse’s respective interest in the special spousal property is fifty percent” (SDCL 55-17-3).
At divorce in South Dakota
Outside a trust, SDCL 25-4-44 lets the court decide the split: “the courts may make an equitable division of the property” belonging to either or both spouses, whatever the title. Inside a special spousal trust the spouses may agree on what happens at dissolution, and if the trust is silent South Dakota’s ordinary dissolution law applies (SDCL 55-17-9).
At a spouse’s death in South Dakota
Outside a trust, SDCL 29A-2-202 gives the surviving spouse of a South Dakota decedent a statutory choice: the survivor “has a right of election, under the limitations and conditions” the section sets, taking an elective share of the augmented estate that grows with the length of the marriage. Inside a special spousal trust the spouses may agree on disposition at death (SDCL 55-17-9).
What it does to basis when the first spouse dies
SDCL 55-17-5 states that, for purposes of 26 U.S.C. 1014(b)(6), a South Dakota special spousal trust is a trust established under the community property laws of this state. The documents read do not settle the federal result beyond that statute. IRS Publication 555, the IRS’s guide to community property, says it “doesn’t address the federal tax treatment of income or property” subject to the community property election under the laws of Alaska, Tennessee and South Dakota. The statute that gives community property a new basis for the survivor, 26 U.S.C. 1014(b)(6), refers to “property which represents the surviving spouse’s one-half share of community property” held under the community property laws of a State.
What the state statute fixes is the split. As a computed illustration, if a South Dakota couple placed $400,000 of shares in a qualifying trust and the trust held it at a spouse’s death, the survivor’s one-half share is half of that value, or $200,000. Whether the whole $400,000 gets a new basis at that death is the open federal question; CMG’s page on community property trusts and the IRS covers it. On the same facts, a common law qualified joint interest would give the survivor a basis equal to the total of $200,000 plus $50,000, which is $250,000.
What the documents do not say
- The archived text does not show what the 2026 session law, chapter 198, changed in SDCL 55-17-5.
- Beyond SDCL 55-17-5 and the IRS note below, the documents read do not say how the federal tax rules treat property in a South Dakota special spousal trust at the first spouse’s death.
Common mistakes
- Treating the elective share as the trust rule; the elective share is the default rule for property outside a special spousal trust.
- Assuming the answer in this state settles it for a couple who move; the rules depend on the state where the spouses are domiciled and, for property in a trust, on the trust.
Related: community property states by state, community property trusts and the IRS, South Dakota retirement taxes, and South Dakota probate cost.
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Answer againSources
- SDCL chapter 55-17 Special Spousal Trusts, sections 55-17-1 to 55-17-14 (South Dakota Codified Laws): https://sdlegislature.gov/api/Statutes/Statute/55-17
- SDCL 25-4-44 Division of property between parties (South Dakota Codified Laws): https://sdlegislature.gov/api/Statutes/Statute/25-4-44
- SDCL 29A-2-202 Elective share (South Dakota Codified Laws): https://sdlegislature.gov/api/Statutes/Statute/29A-2-202
- SDCL 55-3-41 Qualified person defined (South Dakota Codified Laws): https://sdlegislature.gov/api/Statutes/Statute/55-3-41
- IRS Publication 551, Basis of Assets (December 2025): https://www.irs.gov/pub/irs-pdf/p551.pdf
- 26 U.S.C. 1014, Basis of property acquired from a decedent (United States Code, 2024 Edition): https://www.govinfo.gov/link/uscode/26/1014?link-type=html
- IRS Publication 555, Community Property: https://www.irs.gov/pub/irs-pdf/p555.pdf
Sources: the primary documents linked above, read on October 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.