Wyoming is a leading jurisdiction for asset protection and financial privacy planning in the United States. Families often consider Wyoming for their trust structures because of the state’s favorable tax structure and modern business and trust laws.

Wyoming Uniform Trust Code

The Wyoming Uniform Trust Code (the “WUTC”) governs the validity and administration of trusts settled or administered pursuant to Wyoming law. The WUTC permits directed trusts and dynasty trusts, both of which support the longevity and resilience of a trust.

• Directed trusts empower families to choose different individuals or entities to be responsible for investment, distribution, and administrative responsibilities; this unbundling of fiduciary services provides families more control and may be employed as a form of risk management.
• The WUTC permits dynasty trusts lasting up to 1,000 years; dynasty trusts enable families to preserve and protect wealth across generations in a tax-efficient manner (i.e., all else equal, without being subject to federal generation-skipping transfer tax limits or trust term limits found in other states).

Flexible WUTC laws enable reformation and modernization of existing trusts. This may allow trusts to adapt over time as laws, family needs, or other circumstances change, reducing the risk of legal or structural obsolescence.

Favorable Tax and Privacy Protection

Wyoming does not impose state taxes on income, capital gains, gifts, or estates, whether owned individually or by entities such as trusts. Assets are protected against state tax liability and the associated costs of Wyoming state tax compliance and preparation. 

From a privacy standpoint, this means that trust assets, and their beneficial owners, have no state tax filing or disclosure requirements. As a result, Wyoming trusts are not required to register or to disclose assets, liabilities, or activities to the state. 

Wyoming law explicitly protects the privacy of the settlor, beneficiaries, and other interested parties of a trust through the automatic seal of judicial records, preventing sensitive information regarding the trust and its activities from entering the public record.

Creditor Protections

As related to creditor protections, the WUTC provides the following for irrevocable trusts:

• Spendthrift provisions are broadly enforceable, and creditors may only reach trust assets upon distribution from the trust and receipt of the assets by the beneficiary.
• Despite trust provisions that may compel a distribution, creditors may not compel a trust distribution under any circumstance, even in the event of trustee abuse of discretion. The sole exception creditors specified are claims for delinquent child support, financial institutions acting in reliance on pledged trust assets used to obtain credit, and property the grantor received by way of fraudulent transfer. These statutorily defined exception creditors demonstrate legislative intent to limit exceptions and decreases the risk of judicial expansion of the class of exception creditors beyond the current scope.
• Trustee distributions from a spendthrift trust to third parties on behalf of the beneficiary in question are permissible and are not subject to attachment.
• A beneficial interest in a trust does not create a property interest vested in the beneficiary. Trust assets subject to powers of appointment or withdrawal are protected until such power is exercised.

Finally, under Wyoming law, the intent of the grantor is paramount, as evidenced by the strict enforcement of in terrorem (no contest) clauses, providing additional protection against creditor claims and challenges arising from within the class of heirs and beneficiaries.

Self-Settled Irrevocable Trusts

Wyoming law expressly permits self-settled irrevocable trusts through the use of qualified spend-thrift trusts (QSTs). Through a QST, the grantor may retain the power to:

• Veto distributions,
• Appoint trust assets,
• Receive income,
• Receive or use trust principal, and/or
• Manage trust assets and investments.

Wyoming law also permits a second type of self-settled trust, known as discretionary asset protection trusts, per the WUTC.

Wyoming Limited Liability Companies

The Wyoming Limited Liability Company Act (the “Act”) governs limited liability companies organized and operated within the State of Wyoming. The Act affords substantial asset protection planning opportunities with express statutory protection for single-member LLCs, limited remedies, and minimal mandatory disclosures.

The Act provides that a charging order is the sole remedy available to creditors of LLC members and expressly prohibits all other remedies, including foreclosures and court orders for directions. Transfers of membership interests, along with economic and voting rights, are permitted only to the extent such transfer does not violate provisions restricting transfer contained in the Operating Agreement of the LLC.

The Act further expressly recognizes the validity of a single-member LLC and affords them identical protections to multi-member LLCs. 

Finally, the Act affords substantial privacy protection and does not require the disclosure of the identity of any owner, manager, or beneficial interest of the LLC, nor does it require the disclosure of any specific assets, liabilities, or transactions to which the LLC is party.

Limitations of Actions

In general, claims arising under the Wyoming Uniform Fraudulent Transfers Act must be filed within two years of the transfer — or six months after the transfer could reasonably have been discovered. There may be instances in which limitation periods may be shortened if statutorily specified notice is provided.

Conclusion

With comprehensive trust and entity laws, a favorable tax environment, and robust privacy protections, Wyoming is an attractive jurisdiction for asset protection planning. By leveraging tools such as directed and dynasty trusts, qualified spendthrift trusts, and LLC structures, families may plan for long-term wealth preservation, enhanced control, and creditor protections. Please contact Willow Street for more information regarding the strategies discussed herein, trust administrative services, or general benefits of Wyoming planning.