Qualified Spendthrift Trusts
Effective July 1, 2007, the State of Wyoming has enacted changes to its existing Uniform Trust Code which allows for self-settled asset protection trusts referred to as a “Qualified Spendthrift Trust.” This type of trust has also been referred to as “self settled” or “asset protection” trust.
While the settlor of a Qualified Spendthrift Trust cannot be the trustee, the settlor may retain the powers to:
- Veto any distribution from the Qualified Spendthrift Trust
- Exercise a testamentary or inter vivos general or limited power of appointment over the assets of the Qualified Spendthrift Trust
- Add or remove a trustee, trust protector or trust advisor
- Serve as investment advisor to the Qualified Spendthrift Trust
The Wyoming legislation contains provisions that permit the transfer of trust assets from a similar type of trust previously created and funded in another jurisdiction to a Wyoming Qualified Spendthrift Trust, with the creditor protection aspects of the Wyoming Statutes relating back to the date when the trust was originally funded in the other jurisdiction.
The advantage of this type of trust is that the settlor can shield certain assets from potential creditors while still getting the benefits of the assets, such as income or principal distributions from the trust for the Settlor’s benefit. Anyone considering this type of trust must consider the type of assets that they will be funding the trust with and can not make themselves totally insolvent by transferring all of their assets into this type of trust.
Wyoming Bank and Trust has the experience of managing this type of trust and has worked with settlors and their advisors in developing the same. We are willing to work with trust advisors selected for either making the investment of the trust assets and/or recommend distributions from the trust. We are also willing to work with trust protectors selected to make decisions as allowed under the Wyoming Uniform Trust Code.
The statutes governing the Qualified Spendthrift Trust can be found in the Wyoming Uniform Trust Code WS S 4-10-101 et seq. The Wyoming Statutes can be found at the Wyoming legislative website: legisweb.state.wy.us.
A Generation-Skipping Trust is an estate-planning technique used to transfer property to second-generation beneficiaries, usually grandchildren, without the trust assets becoming part of the children’s estate. The benefits of this type of trust are:
- The trust can grow much more, since it is not subject to estate and inheritance taxes at each generational level
- The trust assets are protected from spendthrifts, creditor claims or claims due to divorce of beneficiaries in succeeding generations
- Trust assets are being managed by experienced professionals with the aid of any named trust advisors or trust protectors
Wyoming is one of the few states that allows for the use of Dynasty Trusts in the estate planning. The Rule Against Perpetuities has been extended to 1,000 years in the State of Wyoming WS S 34-1-139 (b). The use of a Dynasty Trust along with a Generation-Skipping Trust can extend the benefits of the Generation-Skipping Trust for many more generations. This will also allow the Trust to even grow more, since a Wyoming-based trust IS NOT subject to state income taxes, since the State of Wyoming does not have a state income tax.
Revocable Living Trust
The Revocable Living Trust allows you to set up a trust that you are in complete control of during your lifetime and while you are still competent. You may add Trust Advisors (per WS S 4-10-712) or Trust Protectors (per WS S 4-10-710) to assist us (as the corporate trustee) in the investments of the assets or for distributions during times of incompetency, or for the benefit of others that the trust provides benefits to — such as other family members, a pet (Wyoming law under WS S 4-10-409 permits the establishment of a trust for a pet), or a charity.
The benefits of a Revocable Living Trust being held by us as trustee include:
- Continuity of management in the event of illness, incompetency or death
- Avoidance of probate and direct distributions to beneficiaries
- Professional asset management and safekeeping of assets with collection and disbursement of income
- Accurate record keeping and tax ledgers
You may also wish to name us as the Successor Trustee of your Revocable Living Trust, whereby we will take over as trustee upon your death or incapacity if you are serving as your own trustee during your lifetime.
A Testamentary Trust is established by the terms of a Will and begins to function only after death and probate of the Will. This type of trust allows the Settlor to control the assets up until the time of death and then passes the management to a trustee after death.
The benefits of having us serve as a trustee of a testamentary trust include:
- Impartial third-party management of the assets and distribution thereof to beneficiaries
- Accurate record keeping and tax ledgers
- Professionals that are knowledgeable on the administration of this type of trust
- Relieving family members of the burden and conflicts that can arise in managing this type of trust
We can act in the capacity of Personal Representative or Executor of a Will. In this capacity, we would be responsible for the settlement of the estate per the terms of the Will and the laws of the State of Wyoming. If a Will does not exist, then we would probate and settle the estate according to the intestacy laws of the State of Wyoming. (See WS S 2-4-101 thru 2-4-108 on intestacy.)
Some of the duties that are required of the Personal Representative include:
- Gathering of the assets
- Payment of debts
- Contesting improper claims
- Collecting sums owed to the estate
- Managing the assets during administration
- Sale of assets
- Payment of taxes
- Payment of estate expenses (See Wyoming Probate Code at WS S 2-1-101 et seq.)
The benefits of having us serve in this function include having experienced professionals that are familiar with the process and who are an impartial to the beneficiaries of the estate.
An Irrevocable Life Insurance Trust (ILIT) is set up to hold life insurance policies outside of an estate. This type of trust is able to provide liquidity to an estate that may include a ranch, farm or small business, or it may be used to provide the required funds to beneficiaries to pay estate taxes or partners to pay of a deceased partners’ estate. An ILIT type of trust has also been used in connection with Dynasty Trusts to provide for future generations.
A Conservator is appointed to manage the assets for an incompetent or incapacitated person. The Conservator has full investment powers and manages the assets according to the needs of the ward, subject to supervision of the Court. (See WS S 3-3-101 thru 3-3-1106). The Conservator is responsible for an annual accounting to the Court having jurisdiction.
The benefits of having a professional trustee serve as Conservator include:
- Accurate accounting to the Court
- Impartial party handling affairs of Ward
- Family members or friends are not tempted to mismanage assets
- Professional management, record keeping and tax reporting
A Conservatorship Trust can be set up by a Conservator under WS S 3-3-607 (vi). Under this statutory section, the trust has to be revocable, needs a Wyoming corporate Trustee and can only be created by an order of a court having jurisdiction over the Conservatorship. The advantage of using this type of trust includes the extension of time that the assets can be managed for the benefit of the Ward for the Ward’s benefit. The use of this type of trust is primarily for minors after they turn 18 and there is a large sum of money involved in their Conservatorship. The creation of a Conservatorship Trust can assist in providing for this young adult in a more structured and defined way for some time after they become a legal adult.
Our custody services can be used for a variety of reasons by individuals, public entities or both profit and nonprofit institutions. This kind of account is designed to hold securities such as stock or bonds, or other assets such as mutual funds and money market investments.
Institutions have used this type of account for money management purposes or to hold securities that are being managed by outside managers. Public entities receive the highest GASB ratings when their securities are held through a banking institution. Institutions such as insurance companies use this type of service to hold securities being pledged to the Wyoming Insurance Commissioner.
Individuals use this type of service for the benefit of having all of their assets being held at one location. This type of service provides for accurate accounting of income and the redemption of securities. Individuals who have named us as the successor trustee of their Revocable Living Trust use this type of service in order to provide them with the peace of mind that their liquid assets are readily available to their successor trustee in the event we need to began acting in an emergency situation.
Wyoming Bank & Trust uses The Bank of New York as its primary custodian for DTC-eligible securities and US Treasury and Agency issues. The Bank of New York is recognized as the premier custodian for these types of securities. Fidelity Investor Services is used to custodian all mutual funds.
Wyoming Bank & Trust has served as either the Trustee, Paying Agent, Registrar or Escrow Agent on billions of dollars of public entity debt financings throughout the State of Wyoming. The financings have included:
- General obligation bonds
- Revenue bonds – water, sewer, hospital, lease revenue
- Special improvement district bonds
- Capital facilities tax issues
- Lease financings
- Tax anticipation notes
- Refunding bonds & refunding escrows
- Industrial revenue bonds
The issuers have included counties, cities, towns, schools, hospitals and colleges, some of which are outlined below:
- States: State of Wyoming
- Counties: Albany, Carbon, Goshen, Laramie, Park, Platte, Sheridan, Teton
- Cities: Cheyenne, Cody, Laramie, Sheridan
- Towns: Burns, Greybull, Jackson, Kaycee, Lyman, Pine Bluffs, Thermopolis, Torrington
- Schools Districts: Converse #2, Fremont #22, Laramie #1 & #2, Platte #1, Teton #1, Washakie #1, Weston #1 & #7
- Colleges: Central Wyoming Community College, Laramie County Community College, Northwest Community College, Northern Wyoming Community College, Western Wyoming Community College
- Universities: University of Wyoming
- Hospitals: Hot Springs County Hospital, Johnson County Hospital, Platte County Hospital, Memorial Hospital of Sheridan County, Washakie County Hospital, West Park Hospital
- Others: Buffalo Bill Museum, Northwest Improvement District, Platte County Fire District, Salt Creek Water District
Wyoming Bank & Trust is very experienced at maintaining and investing project funds and reserve funds that may be associated with a public debt financing. Also, we are very familiar with the requirements necessary to perform annual disclosures through the EMMA system and with the record-keeping requirements to perform arbitrage rebate calculations.