We shine a light on the benefits of being a Wyoming resident from favorable tax rates to trust laws.
Why choose Wyoming as the situs for your trust?
Wyoming is frequently cited as one of the most tax-friendly states in which to reside, or as a situs for business entities and trusts.
Wyoming is on the cutting-edge of situs planning due to low taxes, flexible and favorable laws, efficient administration, and a fast and efficient court system. As a Wyoming chartered and operated bank, RMB is an ideal partner to help you take advantage of Wyoming’s favorable trust environment.
Favorable Trust Laws
Wyoming has enacted trust protector statutes, which allow a disinterested party to make certain modifications to irrevocable trusts that would otherwise require court approval.
Ability to Waive Notification Requirement
Traditional trust law requires trustees to provide notice to beneficiaries regarding an interest held in a trust. Wyoming allows the grantor to waive all beneficiary notice requirements which means a grantor can keep the beneficiaries unaware of the assets held in trust.
The Wyoming statutes allow certain parties to represent and bind minor and unborn trust beneficiaries.
Wyoming has enacted a decanting statute allowing a trust’s assets to be transferred to another trust with substantially the same dispositive terms.
Wyoming law allows trustee duties to be divided in order to facilitate family governance, cost control, and administrative efficiency. Under certain circumstances, the creator of a trust may serve as investment advisor in order to maintain a greater level of control over the assets held in trust.
Long Dynasty Returns
Wyoming has enacted a 1,000 year term limit on multigenerational trusts. As a result, a properly formed and administered Wyoming Dynasty Trust can be exempt from gift, estate, and generation-skipping transfer taxes for up to 1,000 years. Most other states limit the duration of trusts to a fraction of this period of time.
Asset Protection and Privacy
Wyoming has made an effort to provide privacy for the identity of individuals and families.
Wyoming does not require disclosure of LLC owners or managers as a matter of public record.
Wyoming does not require that trust agreements, trust assets, or trust beneficiaries be recorded or disclosed to the public.
In 2007, Wyoming has enacted statutes for a self-settled asset protection trust, specifically known as a Wyoming Qualified Spendthrift Trust (QST). In a properly drafted and administered Wyoming QST, the grantor of the QST and the grantor’s family can be the beneficiaries of the QST, but still maintain creditor and liability protection.
Wyoming has provided for an additional asset-protection trust available in conjunction with a regulated financial institution trustee. These Wyoming Domestic Asset Protection Trusts may provide individuals an opportunity to protect their assets from creditors while maintaining significant control.
In many states, the creditors of an LLC member can assume the member’s ownership rights, force the sale of company assets, or completely dissolve the company. In Wyoming, a creditor’s sole remedy against a member is a charging order on the debtor’s LLC interest. This means a creditor cannot force dissolution of the LLC and the debtor’s voting and management rights are not affected.
Wyoming is one of only two states that specifically afford a single-member LLC the same protection as a multi-member LLC.
For residents of states that impose an income tax, transferring assets to a Wyoming Incomplete Gift Non-Grantor (WING) trust could substantially defer, decrease, or eliminate state income tax liability. The Internal Revenue Service has issued several private letter rulings (PLR 201310002 and PLR 201400010) allowing such a structure for a Nevada Trust. A properly drafted WING trust may allow a grantor to retain a beneficial interest in assets and avoid state income tax in the grantor’s home state without gift tax consequences. In addition, a WING trust can combine state income tax savings with the asset protection benefits of a Wyoming Qualified Spendthrift Trust.
Only Wyoming, Nevada, and a few other states have enacted trust laws that comply with IRS requirements for a valid Incomplete Gift Non-Grantor Trust.
Relocating Assets and Entities to Wyoming
Moving to Wyoming to establish residency is the best way to benefit from the Wyoming advantages, but if establishing residency is not an option, there are still ways to utilize Wyoming’s favorable legal and tax environment.
Generally speaking, trusts and business entities can easily relocate to Wyoming, even if the grantor or owner is not a Wyoming resident. Future business, tax, and estate planning should involve Wyoming entities and Wyoming institutions in order to capitalize on the myriad tax, asset protection and administrative benefits.