For people who are not taxable in the USA and do not transfer any US-situated assets to the trust, a US Asset Protection Trust (APT) can be the ideal solution for asset protection. The trust protects you from lawsuits, creditors, divorce, the government or the tax authority, and plain bad luck.
Not suitable if you stay resident in your home country. The trust is a structure for people who leave: it only comes into question once a move abroad is actually on the cards, and we tell you so just as clearly in the first conversation. As long as you remain tax-resident at home, a foundation-style Limited (Company Limited by Guarantee), Wyoming and accounts outside the EU are the right route. Our structure overview shows how the tiers work together.
Unlike a foundation, a trust of this kind appears in no public register, it is completely tax-free in the USA (as long as there is no US connection!) and automatic exchange of information under the OECD CRS is not an issue in the USA either. You do not even need to name third-party beneficiaries: you can be the beneficiary of your own trust.
And the best part: in Wyoming, where we set up trusts, you need no professional trustee and no foundation council. You steer the trust yourself and keep full control over your wealth.
What is a trust?
A trust is a legal form that resembles a foundation. A trust is not, however, a legal person. It is a contractual arrangement that in the USA is not entered in the commercial register or in any public transparency register. So the trust stays anonymous.
A trust is comparable to a safe that holds assets. The trust and its assets are managed by a trustee. The trustee can be a trust company or a so-called "Private Trust Company" (controlled by you).
Every trust has three parts:
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Settlor: the person who creates the trust and transfers their assets to it.
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Beneficiary: the person who "benefits" from the trust. The assets may only be used for the benefit of this person. In a self-settled trust, the settlor is the beneficiary.
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Trustee: the person (natural or legal) responsible for making sure the trust is properly administered. In the end, the trustee's role resembles that of a manager or managing director.
Once your assets have been transferred to the trust, the trust owns them. You can be the beneficiary who also controls the trust through a Private Trust Company. From that point on, the trust assets can no longer be used to satisfy creditors' claims.
Advantages of a trust in Wyoming
An APT in Wyoming set up in combination with a Wyoming LLC has several significant advantages. The legislature worked hard to create a haven for asset protection and tax. The advantages of Wyoming's trust legislation are not loopholes, though: they were created with the intention that you can use them to the full.
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Asset protection: once certain statutory periods have expired, usually two years, assets in the APT can no longer be reached by your creditors.
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Anonymity
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No state supervision
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No local staff required
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No loss of control
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No need to travel
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No taxation in the USA if there are no US assets and no US beneficiaries
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Self-settled, qualified spendthrift and discretionary trusts are permitted
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Credit protection starts immediately, no waiting period
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No state-level income, gift or estate taxes in Wyoming
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Multi-generation, perpetual and dynasty trusts
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No minimum capital investment
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Ongoing administration far less onerous and costly than, for example, in Delaware or Nevada
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Regulated and unregulated trust companies are permitted
Which assets can be protected?
The assets that can be protected by the trust include, among others:
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Personal residence or home
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Rental properties and real estate investments
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Investment accounts, for example portfolios
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Intellectual property, for example patents and trademarks
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Bank accounts, for example savings
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Holding companies and subsidiaries
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Bitcoin, Ethereum and other alternative currencies
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Limited liability companies
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and much more
What is a self-settled trust?
Put simply, a self-settled trust is an arrangement of which you yourself are the beneficiary. It is anonymous and offers immediate credit protection. Other US states require that you can only create a trust for the benefit of third parties. Wyoming trusts can be structured as self-settled trusts, with the advantage that you can administer the trust yourself and do not have to hire an expensive lawyer as trustee on a pirate island.
Such entities have many uses. A trust set up before marriage is treated as outside your marital assets. The assets are divorce-proof and make a prenuptial agreement unnecessary.
The Wyoming Dynasty Trust
A dynasty trust is an asset protection trust designed to pass wealth efficiently between generations. Unlike most other trusts, which have a limited term, Wyoming's dynasty trust avoids the rule against perpetuities and has a term of 1,000 years.
The dynasty trust avoids US estate, gift and so-called generation-skipping tax. The main advantage for our clients: you can use it to plan your wealth seriously for the next 100 years or more. It is short-term thinking that harms your wealth, and the dynasty trust invites you to look far ahead.
Revocable and irrevocable trusts
A revocable trust is a tool for US estate planning and offers no asset protection. An irrevocable trust is treated in the eyes of the law as a separate legal entity and cannot be revoked by a judge to pay your debts.
Do not let the word "irrevocable" put you off, though. The trust we set up for you allows you to change the beneficiaries at any time. You act as your own trustee or can appoint and remove other trustees at your own discretion.
What is a Private Trust Company (PTC)?
You yourself may not be the trustee of your own trust. We can, however, set up a Wyoming LLC for you of which you are the manager, and this LLC may then be appointed as trustee of your trust. That is a Private Trust Company (PTC). It saves you having to appoint an expensive external lawyer or foundation council as trustee.
In Wyoming, a Private Trust Company is not regulated by the state (it must, however, be registered with the Wyoming banking regulator). There are no minimum capital requirements; in other states these are usually 200,000 to 500,000 US dollars.
What you need to know about transferring assets to the trust
An Asset Protection Trust offers no asset protection for:
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liabilities from court-ordered child support,
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assets pledged as security for loans,
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fraudulent transfers to the trust.
Tax treatment
As a rule, we only recommend this arrangement if none of the parties involved is fully taxable in the USA and you do not plan to transfer US assets to the trust. On that assumption, no tax liability at all arises in the USA, neither when assets are transferred to the trust nor when distributions are made to the beneficiaries.
The trust works best if you and your family live in a country where foreign income is tax-free and, in the end, none of the taxes mentioned here affects you.