Posted 4 months ago
Trusts and Estates
Wills and Probate
Privacy in the digital age has become a buzzword that few fully understand. Most clients understand privacy is important at a basic level, but don’t full inform themselves as to what this means or how to fully take advantage of it. This post will cover privacy primarily as it pertains to owning, managing and eventually passing on one’s assets. We will start with a short defenense of privacy before examing privacy during probate, when forming a company and when placing assets into trust. We will then shortly discuss utilizing a revocable trust, commonly used for probate, to enhance corporate privacy.
The simplest form of privacy we all understand is attorney-client privilege. No one seriously argues against this form of privacy because it is understood that an attorney and their client must have trust for the relationship to function. In other areas of life, though, clients mistakenly believe that those seeking maximum privacy are “doing something wrong” or “have something to hide”. There is almost a stigma surrounding the pursuit of privacy.
Wyoming provides several avenues for those seeking to keep their personal affairs private. One non-controversial pursuit of privacy is forming revocable living trusts to avoid probate. We are a trust jurisdiction and many of our clients are elderly. This invariably means we advise clients on the drawbacks associated with probate; namely the high fees, the drawn-out process which consumes months and the fact everything is put into public record since it was handled through the courts. Avoiding these drawbacks is as simple as forming a revocable living trust.
The assets held in trust are not made public, and are distributed privately after the client’s death. This avoids having the family’s asset list made public, along with estimated valuations for the assets and the paper trail showing who now owns what. That kind of paper trail is certain to invite unwanted attention. Courts lack jurisdiction over assets held in a revocable trust, though, and the family’s secrets are not put on full display for the world to see.
Some of these same principles apply when forming an irrevocable or asset protection trust. The trust has a TIN, but is not otherwise required to publicly list its existence let alone its assets. These trusts can be powerful deterrents for creditors and when applied correctly can even be used as a substitute for a prenuptial agreement.
Wyoming has become a leading advocate for corporate privacy as well, which we will cover in more detail in a later article. Wyoming limited liability corporations are not required to list owners or managers on the public record. In fact, they are not required to be listed with the state of Wyoming at all. To be certain, the company organizing the LLC must keep complete records. In addition, when filing for an Employer Identification Number (E.I.N.), one must provide further information to the Internal Revenue Service (I.R.S.). However, this information is stored at the federal level and is not publicly accessible.
While the government will always have access to who owns a company, there is no reason to flaunt this information publicly. Flaunting your wealth can only invite unwanted scrutiny and attention. Who has ever gained through such conspicuous actions? Nobody has ever sued a homeless person for millions, but the wealthy are often targeted not merely by strangers but even aggressive family members.
Those not residing in Wyoming may not feel this information is particularly useful to them. However, with some creative thinking the benefits here can apply more broadly. For example, Wyoming corporations are not limited to those living in WY. Further, those seeking to set up Profit Corporations and LLCs in other states can easily have their LLC and Corporation shares owned by a RLT. This will keep their name from being listed as the owner on record. Instead, their LLC is listed as being owned by a RLT. Revocable trusts should not be confused with irrevocable trusts, which is an article for later, but can be used as a weapon in the fight for privacy. Once a corporation has been formed, then your client should select a professional registered agent service for their address on record with the state. This will ensure they still receive important documents, but their information is only stored securely with their registered office provider.
Thanks for reading. As always, we are more than happy to answer any questions you may have and our services are not limited to the state of Wyoming. Feel free to visit our profile here or our website for contact information. You may also find our next article on the specifics of forming a Wyoming limited liability corporation
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