Wyoming DAPT Provisions. W.S. §4-10-510 requires that a Wyoming DAPT
(“DAPT”) remain “irrevocable” in order to provide the asset protection
benefits set forth in Article 10 of the Wyoming Uniform Trust Code.
Irrevocability, however, for purposes of your DAPT is a legal and not
a common sense term.
I. Wyoming Law on Grantor Retained Interests and Powers.
Subparagraph (a)(iv) of W.S. §4-10-510 provides that the trust does
not become revocable, i.e., it remains irrevocable, even if you, as
the person establishing the DAPT (“Settlor” or
“Grantor”), retain one or more of the following interests or powers in your
DAPT:
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Grantor Retained Powers relating to Income and Principal:
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potential or actual receipt of income, including rights to the
income retained in trust;
-
potential or actual receipt or use of principal when a
qualified trustee, including a trustee acting at the direction
of an advisor, other than the Settlor, acts in the trustee's
sole discretion or pursuant to an ascertainable standard
contained;
-
potential or actual receipt of income or principal from a
DAPT structured as a CRUT or a CRAT- as defined in IRC §664;
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receipt each year of income or principal from a DAPT
structured as a GRAT or a GRUT – as allowed under IRC §2702;
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potential or actual use of real property held under a
qualified personal residence trust within the meaning of the
term in IRC §2702(c);
- receipt each year of a unitrust percentage; and
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potential or actual receipt of income or principal to
pay, in whole or in part, income taxes due on income of the DAPT
if pursuant to a provision in the instrument and the
determination is the result of a qualified trustee's acting:
(I) In the qualified trustee's discretion or pursuant to a
mandatory direction in the trust instrument; or
(II) At the direction of an investment advisor who is acting
in the advisor's discretion.
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Grantor Retained Powers relating to DAPT Distributions:
- power to veto a distribution; and
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inter vivos or testamentary general or limited power of
appointment;
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Grantor Retained Powers relating to DAPT Administration:
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right to add or remove a trustee, trust protector or trust
advisor and appoint a replacement, other than Settlor; and
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right to serve as an investment advisor to the trust, with the
powers provided in W.S. §4-10-712(a)(iii), which is to direct,
consent or disapprove a trustee's action or inaction relating to
investments and (iv), which is to direct the acquisition,
transfer or retention of any trust investment.
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Third-Party Powers:
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A trust protector as provided in W.S. 4-10-710 has the power to
add beneficiaries to the trust who are not the trust protector,
the estate of the trust protector, the creditors of the trust
protector or the heirs of the trust protector; and
-
The ability, whether pursuant to discretion, direction or the
Settlor's exercise of a testamentary power of appointment, of a
qualified trustee to pay, after the death of the transferor, all
or any part of the debts of the transferor outstanding at the
time of the transferor's death, the expenses of administering
the transferor's estate, or any estate or inheritance tax
imposed on or with respect to the transferor's estate.
II. Federal Transfer Tax Implications of Grantor Retained Powers.
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Powers/Interests that will not Result in Grantor Trust but will
result in Estate Inclusion:
- Testamentary general power of appointment;
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Power to appoint income or principal to the charity of your
choosing ; and
- Power to control timing of distributions.
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Powers/Interests that will not Result in Grantor Trust or
Estate Inclusion:
- Administrative powers;
-
Third party power to pay income for the support of an individual
the grantor is legally obligated to support;
- Power to affect enjoyment following a contingency;
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Power to distribute principal limited by an ascertainable
standard;
- Power to withhold income during minority or disability;
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Independent trustee power to distribute income or principal,
unless grantor can remove/replace trustee; and
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Trustee power to distribute income according to a reasonably
definite standard (unless the grantor or the grantor’s spouse is
trustee).
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Powers/Interests that will Result in Grantor Trust and Estate
Inclusion:
- Reversionary interests;
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Power to control distributions during grantor’s life; (B.1.)
- Testamentary power to appoint accumulated income;
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Grantor’s power to deal with trust property for less than full
consideration;
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Grantor’s power to vote controlled corporation stock in a
non-fiduciary capacity, but triggers grantor trust treatment
only as to that stock; and
- Grantor’s right to income.
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Powers/Interests that will Result in Grantor Trust and do not
result in Estate Inclusion:
- Power to loan to grantor without adequate security;
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Actual loan to grantor without adequate interest or security,
outstanding on the first day of the year;
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Power of non-adverse third party to add charity as beneficiary;
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Substitution power exercisable in a non-fiduciary capacity;
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Power of non-adverse third party to deal with trust property
with less than full and adequate consideration;
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Power of non-adverse third party (held in a non-fiduciary
capacity) to vote stock or control investments in stock; and
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Power to use income to pay premiums on policies insuring grantor
and/or spouse.