- Statutory Trust
Wyoming Statutory Business Trust
What's a Statutory Trust
A Statutory Business Trust is established to engage in business, often between parties that are not family. Unlike other Trusts, the "Statutory Trust Certificate of Trust" is filed with the Wyoming Secretary of State. This document is publicly accessible; to preserve your privacy, it is advisable to have your Trust attorney complete it. Unlike standard Asset Protection Trusts, this does create a public paper trail.
Needing to engage in business should not be the sole determining factor when choosing this type of entity. For example, a Wyoming Asset Protection Trust can own an LLC which engages in business, but this would not be the preferred setup if the intended beneficiaries were not related family members.
Such a Trust functions as a private contract that governs business activities. Specifically, assets are placed into the Trust and overseen by one or more trustees. This is done on behalf of the trustor(s) who retain a beneficial interest in the Trust. Certain stipulations can be put in that protect all involved. For example, while the Trust may have five years of operating capital, it would only be allowed to distribute one year of operating funds at a time to prevent its misuse.
Who Should Consider a Dynasty Trust?
These Trusts are generally for families concerned about estate taxes. Wyoming has no estate tax and the federal limit has recently been raised. However, the federal ceiling has historically increased and decreased unexpectedly. These changes often coincide with a change in administrations, Congress being controlled by a new party, or as part of larger tax reforms. This is to say, while you may currently be under the exemption, there is nothing to say you will be in the future. It is thus imperative to plan as though your current exemptions may not last.
Wyoming Trust Companies
Every Wyoming Trust is required to have a trustee. The trustee is in effect the manager of the Trust. They oversee its affairs and ensure the trust's assets are being used as intended. Previously, families were often forced to employ the services of a Public Trust Company, e.g. a bank or other trustee offering services to the public. Recently, though, Unregulated Private Trust Companies have come into vogue. They allow greater control and reduce costs. There is no extra layer of bureaucracy, nor is there the need to pay a third party. While private trust companies are generally preferable, there are circumstances where a public trustee is better. For example, if there is a disagreement between beneficiaries, then having an independent trustee adjudicate can lead to less squabbling between family members.
Wyoming Trust Attorneys
It is strongly advised to collaborate with a seasoned Wyoming Trust Attorney for your trust-related matters. Entrusting crucial documents and decisions to chance is not advisable. Some non-legal service providers offer generic trust templates to everyone, but relying on such a one-size-fits-all approach significantly raises the likelihood of the trust being invalidated or your family missing out on anticipated tax benefits. To ensure the proper execution and safeguarding of your trust, seeking guidance from an experienced legal professional is paramount.
Generation Skipping Transfer Tax (GSTT or GST)
Poor planning can erode the value of a Trust over time through unnecessary taxation. A Dynasty r avoids the gift tax (which is incurred when living), the estate tax (when the giver passes away), and the GST (which occurs when transferring assets to a beneficiary that's at least two generations removed from the giver). GST currently imposes a tax rate equal to the highest marginal tax rate. Proper planning can limit or avoid these taxes altogether.
Why a Dynasty Trust in Wyoming?
Wyoming's legislature has worked hard to make the state a preeminent Trust jurisdiction. The Trust laws have been designed to attract capital through nation and world-leading asset protection and tax benefits. For example, Wyoming has no state income taxes. Trusts in the state can also contain a spendthrift clause, making it difficult for creditors to attach to beneficiaries’ beneficial interest. While a Wyoming Dynasty Trust is irrevocable, the state is flexible in allowing the Trust documents to be altered as your family's needs change.