We are seeing an increasing number of clients that want to situs trusts in Wyoming due to its favorable trust law and lack of state income tax, although over the last several months clients have also sought the open spaces of Wyoming as a result of COVID. Regardless of COVID, Wyoming has consistently been on the forefront of developing modern trust laws that favor high net worth clients. Examples discussed below include strong privacy protections for trusts and LLCs, comprehensive asset protection laws, and the ability to create a private family trust company to act as trustee exclusively for the family’s trusts.
The Wyoming legislature enacted privacy laws that help ensure the settlors and beneficiaries of trusts and the members of LLCs remain private. Regarding LLCs, only the identity of the registered agent must be disclosed to the Wyoming Secretary of State – while the members, managers, and other related parties stay confidential. Regarding trusts, there is no duty to publicly register the trust nor any public record that a trust exists. Wyoming further allows for many aspects of trust administration to be accomplished outside of court via a non-judicial settlement agreement. If that is not possible, or if court approval is desired, a court proceeding can be filed and access is automatically limited to the interested persons. As a result, there is no need to file motions to seal/limit access in trust matters. Wyoming has also recently authorized the creation of a Chancery Court, which will be a specialized court that will hear cases in certain subject matter areas, including the Uniform Trust Code. Chancery Court cases will be on an expedited schedule and the judges will have experience in the specific subject matter area allowing for efficient resolution of trust matters.
Wyoming has even provided substantial powers to control what information remains private within the family. Notably, while the Uniform Trust Code requires certain information to be disclosed to beneficiaries, Wyoming removed such requirement and allows the settlor to state in the trust what information is or is not disclosed to beneficiaries. W.S. § 4-10-105 & 813.
Next, Wyoming is one of a few states in which a self-settled domestic asset protection trust can be created. Wyoming’s asset protection statutes allow the settlor to receive distributions and maintain significant control over the trust while protecting the assets from creditors with just a few exceptions for fraudulent transfers, defaults in payment of child support, and assets listed on a loan application. The statutes are detailed and allow for two different types of trusts, a Qualified Spendthrift Trust and a Discretionary Asset Protection Trust. W.S. §§ 4-10-510 through 523; 4-10-506(c).
In addition, Wyoming has no state income tax, providing a significant benefit to residents or to non-grantor trusts with a situs in the state. Moreover, even if an irrevocable trust was not created in Wyoming or does not currently have a situs in the state, it can be moved to take advantage of the tax savings.
Finally, Wyoming allows families to create a private family trust company, which is an entity that can act as trustee of family trusts and provide situs for those trusts in Wyoming. Private family trust companies are an effective way to provide continuity in trustee succession and involve family members in the management of family assets.