Domestic Asset Protection Trusts in Wyoming

by Norris Law Group on June 11, 2014

Domestic Asset Protection Trusts in WyomingA previous installment of this blog introduced an asset protection strategy known as a self-settled spendthrift trust. A spendthrift trust is often set up by someone who would like to designate a beneficiary for an inheritance, but who is also afraid that the beneficiary might waste the inheritance and spend it all on frivolous or dangerous things, such as flashy cars or a substance abuse habit. A spendthrift trust mitigates a beneficiary’s ability to do something like this, and helps ensure that the inheritance will be used as you intend for it to be used.

Wyoming allows self-settled spendthrift trusts, which falls under the category of a Domestic Asset Protection Trust, or DAPT. Timothy Beppler and Christopher Reimer write about this particular asset protection vehicle in an article for the Utah Bar Association, which explains the history behind the creation the DAPT statute in Utah, which makes spendthrift trusts possible.

Wyoming amended its Uniform Trust Code to allow domestic asset protection trusts (Wyo. Stat. Ann. §§ 4-10-510 [2011]). Wyoming’s DAPT law contains provisions similar to some other states, including Utah. For example, as is the case in Utah, a Wyoming creditor can void a transfer to a spendthrift trust by filing suit under Wyoming’s Uniform Fraudulent Transfer Act. Wyoming’s DAPT laws are unique in that they ask settlors to perform “due diligence” before any assets can be transferred to a DAPT, including (but not limited to) signing an affidavit stating that the settlor has personal liability insurance “equal to the lesser of $1 million or the value of trust assets,” which he or she vows to maintain. But Wyoming does not put as many conditions on DAPT’s as Utah does.

Wyoming allows spendthrift trusts the meet the following criteria:

  1. the trust must state that it is a “Qualified Spendthrift Trust;”
  2. the trust must be irrevocable;
  3. the trust must be governed under Wyoming law; and
  4. the trust must be subject to a spendthrift provision.

If you have any questions about qualified DAPT and spendthrift trust in Wyoming, discuss them with an experienced attorney familiar with asset protections strategies in Wyoming.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County and throughout Utah in the area of asset protection. Contact them today at 801-932-1238 or online for a free consultation.

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