Wyoming Asset Protection Trusts

If you insure your home, car, and health, then why not insure your other assets? Wyoming is one of the few states in which you can set up a domestic Asset Protection Trust (APT). For high-net-worth individuals looking into ways to safeguard their assets against creditors, lawsuits, and ex-spouses, creating a Wyoming Asset Protection Trust is one of the best options.

Basics

The Wyoming legislature created an asset protection and tax haven by allowing for Self-Settled, Qualified Spendthrift, and Discretionary Trusts. A Self-Settled Trust offers asset protection and allows the settlor to be a beneficiary, providing a unique opportunity for individuals to safeguard their assets while still benefiting from them. Most states require you to establish Trust for someone else, i.e., not self-settled. Qualified Spendthrift Trusts are designed to shield assets from creditors. These types of trusts offer an added layer of security by allowing discretionary distributions, ensuring beneficiaries receive support while maintaining asset protection. Lastly, discretionary trusts grant trustees the discretion to distribute trust assets based on the needs of the beneficiaries providing high flexibility and adaptability in responding to changing circumstances.

To receive the benefits of Wyoming’s trust law, the trust must meet certain requirements. Most importantly the APT must be irrevocable. In Wyoming, all the following is permissible for an irrevocable APT and will not alter its status to a revocable trust. Settlor’s can retain the power to veto distributions from the trust and to appoint/remove trustees and trust protectors. A settlor may receive income from, or the right to income retained in the trust. A settlor can also receive up to five percent of the initial value of the trust or its value as determined according to the trust documents.

Benefits

Asset protection trusts have many benefits. The most notable include:

• Privacy. Wyoming asset protection trusts can be set up in a confidential manner; however, the existence of a Wyoming APT can still be revealed by a lawsuit. The heightened protection from privacy can make trust assets more difficult to find for creditors or litigants.
• Control. Wyoming allows you to name yourself as the investment advisor for your trust. Individuals can retain control over investment decisions for their trust assets. High-net-worth individuals often enjoy this aspect of control. 
• Duration. Trusts may last up to 1,000 years. In contrast, California requires trusts to terminate after 90 years. This means individuals can use Wyoming to create a dynasty trust[MS1] , which may last for multiple generations, and help to protect their wealth for generations to come.
• Decanting. Wyoming allows for decanting, which allows a trustee to move assets from one trust into another. This creates additional flexibility to change the terms of the irrevocable trust.
• Low taxation. Wyoming has some of the lowest taxes in the nation. There is no state capital gains tax, nor any state income tax (on either the individual or corporate level). Non-residents of Wyoming are eligible for those tax benefits if you establish a Wyoming trust, however, income distributed to a non-Wyoming resident will be subject to the income tax laws of their state of residence.
• Directed Trusts. Trustee and investment advisor responsibilities can be separated, allowing trustees to choose or retain trusted advisors for complex assets.
• Proximity. Wyoming is one time zone ahead of California, which makes doing business there easier.

Trusts of any kind can be complicated, to create, fund, and administrate. This is especially true with Wyoming asset protection trusts. RJS LAW’s experienced tax, trust, and estate attorneys are able to discuss options and create trusts to adequately safeguard your assets. For a no cost consultation, please contact our attorneys via the web at RJS LAW or by phone at 619-595-1655.

Written by Sean Erdman