If you want to create a Wyoming asset protection trust to shield your property from creditors or if you already have a trust and want to transfer property into it, you should be aware of the states’ requirements and restrictions for asset protection trusts. In particular, you must be aware of fraudulent transfer issues and complete required affidavits. See Wyom. Stat. §§ 4-10-501 et seq. (2016).
Wyoming asset protection trust laws promote creation of irrevocable trusts that act to shield the trust creator’s assets from creditor claims and address transfer tax issues. Crucially, asset protection trusts offer protection from future creditors, not from existing ones. When transferring property into this type of trust, the trust creator should not have the intention of defrauding or hiding assets from existing creditors.
For example, in Wyoming transfers to an asset protection trust may be considered fraudulent as to present or future creditors if the transfer was made (1) with actual intent to defraud, delay, or hinder a creditor or (2) without receiving something of equivalent value in exchange and the debtor intended on or believed he would incur debts that he would not be able to pay. See Wyom. Stat §§ 34-14-205, 206 (2016). Intent to defraud can be shown in a number of ways, including by showing that the debtor was sued or threatened with suit before the transfer or if the debtor concealed assets. However, there are other reasons transferring assets to a trust may be considered fraudulent beyond these and the laws can be complicated to interpret, so consult an attorney for further advice. Creditors may bring fraudulent transfer claims for up to four years after the transfer, or one year after transfer was or could reasonably have been discovered if the creditor claim is based upon an intent to hinder, delay or defraud.
In Wyoming, an affidavit always is required to be completed by the trust creator at the time property is being transferred into the trust, with limited exceptions. Wyoming, Stat. §§ 4-10-512, 515 (2016). The affidavit must include the following statements: (1) that the trust creator has the right and authority to transfer the property to the trust; (2) that the transfer will not make the trust creator insolvent; (3) that the trust creator does not intend to defraud any creditors by transferring the property to the trust; (4) that the trust creator does not have any pending or threatened court actions or administrative proceedings against him, except for ones identified in the affidavit; (5) that at the time of the transfer, the trust creator is not in default of a child support obligation by more than 30 days and the trust creator does not plan on filing for bankruptcy; (6) that the property transferred to the trust was not derived from any unlawful activities; and (7) in Wyoming, that the trust creator has a significant amount of insurance coverage. Wyom. Stat § 4-10-523 (2016).
As you might have already concluded, transferring property into an asset protection trust is not as easy as changing the name on a deed or depositing money into a bank account. Transferring assets to a trust can be complicated and legally fraught without a full understanding of the laws at issue. Further, asset protection laws vary from state to state,and there are a few crucial differences that trust creators should understand.
If you are considering creating a Wyoming asset protection trust or want to learn how to transfer assets to a trust, Wyoming Corporate Services Inc works with experienced attorneys to guide you through the asset protection laws. Contact us at 1-800-990-0433 or email us to take advantage of our asset preservation trust services. You can also read about some of our other asset protection strategies here.