Wyoming has far more than just physical beauty; the state also has a diverse business community and is one of the leading U.S. states for solutions that help protect family wealth, mainly through trusts and estate planning.
Several factors contribute to Wyoming consistently remaining at the top of the U.S. states preferred by people wanting to create trusts to protect their family wealth. According to an article published in the Wyoming Law Review, Christopher M. Reimer points out that the modern trust statutes bear no resemblance to the complications faced by the beneficiaries in the past, including the famous case of "Jarndyce and Jarndyce'' in Charles Dicken's Bleak House.
Furthermore, Americans are not eager to follow the past trends of creating trusts in foreign locations. Reimer points to several reasons why the popularity of these foreign jurisdictions has waned, including the stipulation of a local trustee, which meant surrendering more control, and discusses why Wyoming is proving more popular than other U.S. states. Along with Alaska, Delaware, New Hampshire, Nevada, and South Dakota, Wyoming joins the leading trust jurisdictions in the U.S. and, in many cases, surpasses them.
Wyoming: Emerging Trust State
Trusts were initially mostly favored by highly wealthy families, but their popularity has increased considerably among the upper-middle and middle-class families who want to protect their assets. Wyoming has addressed several trust issues, making it a prevalent state for those wanting to create or migrate a trust there. Wyoming LLC& Trust Attorney explain why trusts are important to protecting family wealth and how to use them effectively.
How Trusts Protect Family Wealth?
Trusts offer several benefits and assurances to families. Once created, the trustee must follow the terms of the trust. The trustee's obligations include maintaining the assets and distributing profits and income to the beneficiary.
The trust protects the assets from creditors, poor decisions made by a beneficiary, minimizes estate transfer taxes, and allows families to provide for a family member with special needs or pets. Trusts also ensure that assets continue to grow, even after their creator has passed on.
Trust Law In Wyoming
Due to the Wyoming Uniform Trust Code and several business statutes, numerous opportunities have emerged to create trusts to administer and protect family wealth in Wyoming. The state is known for its competitive fees. Its law permits private settlements of trust matters, reducing the cost and need for court supervision while increasing the speed of settling and privacy.
Directed and Delegated Trusts – Thanks to Wyoming law, family members or trusted advisors are permitted to undertake trustee duties to different parties, allowing them to retain control of the trust's investment and distributions.
The Rule Against Perpetuities – In many states, trusts are not allowed to exist indefinitely, but in Wyoming, trusts can remain valid for up to 1,000 years.
Modernizing Existing Trusts - Wyoming laws permit trust owners to modernize and reform their trusts, including its governing statutes and situs.
Special Purpose Entities - By creating entities, individuals from anywhere can serve as trust protectors and advisors, allowing more flexibility. These special purpose entities often don't need to register with the Wyoming Division of Banking.
Improved Representation – You can appoint someone with general powers of appointment to represent beneficiaries, including minors and the unborn.
Forced Heirship Exclusion – According to Wyoming law, claims based on forced heirship are prohibited, even if the family lives in a forced heirship jurisdiction.
Tax-Friendly State
Individuals and businesses (LLC and Corporations) in Wyoming don't pay taxes on their state income, estate, inheritance, gift, or individual gain. These tax benefits make it cost-effective to transfer wealth into a family trust.
Taxes are imposed on resident settlors, fiduciaries, or beneficiaries and out-of-state retirement income. The state has low rates on property taxes and reasonable property transfer fees. Trusts and LLCs can own insurance policies, but the state also has competitive tax premium rates.
Privacy Protection
Trust owners want to guard their privacy as much as possible, preferring not to reveal their family details, names, and assets. Wyoming does this by not requiring the registration of the trust nor making its documents publicly available. Litigated disputes may require trust information to be made available to the public, but this does not apply to trust-related court proceedings.
Enhanced asset protection in Wyoming includes the creation of LLCs, including single-member LLCs, strict enforcement of no-contest clauses, and owning property as tenants. These trust laws allow trust holders to protect their assets, whether creditors are a spouse. The law also permits the creation of Domestic Asset Protection Trusts and Silent Trusts.
Types of PrivateTrusts
In Wyoming, families can choose from regulated or unregulated Private Trust Companies (PTCs).
Regulated Private Family Trusts
A regulated private family trust requires a minimum investment capital, must follow specific compliance and policy procedures, and is subject to annual state audits. These trusts are subject to state supervision requiring a resident director, a physical office in Wyoming, and employees. These trusts require specific bylaws, and in Wyoming, they can also create an LLC to protect them from piercing their corporate veil. These requirements make regulated family trusts more expensive and time-consuming to develop and manage.
Unregulated Private Family Trusts
Unregulated private family trusts are exempt from the regulations of trustee services. Wyoming laws make these trusts fast to establish and cheaper to run because they have no reporting requirements, minimum capital investment amount, or formalities. Additionally, unregulated family trusts have no licensing requirements, and they can make changes to their board members, specific structural provisions, and members easily.
Final Take
Protecting and managing family wealth is an issue that affects almost everyone today. Wyoming has become the preferred state for trust formations, and the state is committed to enhancing the state's laws to encourage economic growth, privacy, and wealth protection. Wyoming LLC & Trust Attorneys have a long history of offering their clients asset protection and business solutions that include several strategies. This website gives you an overview of trust law, corporate law, and state planning in the state and how these compare with other popular states.