Self Settled Trust

A Self-Settled Trust is a you establish for your own benefit. Historically, Trusts were formed by one individual for the benefit of a third party. Generally a family member or a charity. More recently, leading Trust jurisdictions have begun allowing individuals to form Trusts for themselves. These are called Self-Settled Trusts and they enjoy the same asset protection and Trust benefits as third-party settled Trusts.

This change in Trust law came about as many US-based jurisdictions began to compete more directly with traditional offshore havens such as Nevis and the Cook Islands. A Self-Settled Trust in Wyoming is one example of a Wyoming Asset Protection Trust.

The core of a Self-Settled Trust is the ability to create a Trust for yourself. In this case, you serve as both the settlor and the beneficiary of the Trust. In Wyoming, this provides strong asset protection benefits, unlike California and Texas for example. The Trust holds the title in the eyes of the law. This means the Trust's assets cannot be taken if you are sued individually.

There are many situations where this strategy can be useful. For example, professionals (doctors, attorneys, etc.), real estate investors, and other wealthy individuals stand to benefit. The below examples all decrease the risk of a lawsuit from the beginning because, with the title removed from your name, you are less of a target. The rule is those with assets are often targeted and those without are usually left alone.

1. Professionals: Doctors and attorneys use malpractice insurance to protect personal assets from liabilities arising from their professional practice. Insurance may not always decide to pay, nor is there a guarantee the coverage limit will cover all liabilities. An easier route is to place personal assets into a Self-Settled Asset Protection Trust. This removes the title from your name and places it beyond the reach of creditors. This can protect your home, car, and life savings without paying the increasing cost of malpractice insurance.
2. Real Estate Investors: Real estate is inherently risky. Mortgage payments over time increase your equity and make the asset an increasingly tempting target. Investors frequently over-insure their real estate and take out personal liability insurance in case of a personal credit event as well. Wyoming's Trust and LLC laws make these additional protections unnecessary. Forming a Holding Company and subsidiaries protects properties from one another, and the Self-Settled Trust protects the properties from any personal risks such as car accidents, divorces, the IRS, and bankruptcy.
3. Other Examples: Personal assets cannot be protected with a limited liability company. This makes them an easy target for aggressive attorneys. Whether a lawsuit has merit or not, there is a good chance the opposing counsel will attack personal assets if only to raise your stress level. Removing assets from your personal name and into a Self-Settled Asset Protection Trust keeps creditors from using this tactic. You can sleep well at night knowing your personal and business assets are protected.

Wyoming is one of the few jurisdictions which allows Trusts to exist for 1,000 years. Less favorable states, which tend to also not allow Self-Settled Trusts, limit the Trust's life to one or two generations. This drives many residents of California and Texas to seek our more favorable Trust laws. If you form a Trust in California or Texas you will not enjoy asset protection during your lifetime. You will also pay unnecessary Gift Taxes, Estate Taxes, and Generation Skipping Taxes. These can be avoided with a Self-Settled Wyoming Trust.

Explore the benefits of a Self-Settled Trust for personalized asset protection. Whether you're a professional, real estate investor, or individual seeking comprehensive protection, a Self-Settled Trust offers a strategic solution. Due to the unique nature of Self-Settled Trusts, we recommend only using a Trust Attorney who specializes in such matters. Below are the answers to frequently asked questions about Self-Settled Trust.