Article on The Discovered Country: Wyoming’s Primacy as a Trust Situs Jurisdiction

Amy M. Staehr recently published an Article entitled, The Discovered Country: Wyoming’s Primacy as a Trust Situs Jurisdiction, 18 Wyo. L. Rev. 283-320 (2018). Provided below is an introduction to the Article.

The world is shrinking; it is becoming known. The global community, of which we are all a part, has embraced information sharing, transparency, and collaboration between jurisdictions. Thanks to legislation and enforcement efforts both at home and abroad, governments are collecting long overdue taxes on unreported foreign gains, continuing to close tax and reporting loopholes, and using multinational tools to combat money laundering. To be sure, these efforts have been going on for quite some time and their value is crucial to the viability of nations, to our general safety as citizens of the world, and in ensuring that enacted tax and financial laws are enforced against everyone. As these efforts progress, so do their corollary impacts. Aside from the benefits mentioned above,these efforts have resulted in increased reporting burdens for individuals, banks, money managers, and trust companies; a glut of shared financial information that some governments have little ability to sift through and make use of; and potentially increased peril for individuals living in certain parts of the world. As the intimate nature of our world increases, the laws within jurisdictions and governing interactions between them continue to evolve. As a result, families and the people who advise them are in the unique position of being able to consider a variety of jurisdictions—both new and established—and select the one with the right opportunities, sufficient flexibility, and appropriate safeguards in which to locate trusts to hold a portion or all of a family’s wealth.

In 2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act, Congress passed the Foreign Account Tax Compliance Act (FATCA) in an effort to target non-compliance by U.S. taxpayers making use of foreign accounts, including those utilized by offshore trusts. As a result, U.S. jurisdictions gained popularity as trust situs locations. Wyoming began to be recognized as a safe, stable, and friendly jurisdiction in which to locate a trust, offering accommodating and evolving trust legislation, a state-income-tax-free climate, and enhanced creditor protection. Christopher M. Reimer’s comprehensive 2011 Wyoming Law Review article entitled The Undiscovered Country: Wyoming’s Emergence as a Leading Trust Situs Jurisdiction details Wyoming trust law as compared to other leading jurisdictions at that time.

Since the publication of that article, neither the scrutiny of offshore trust jurisdictions nor the corresponding interest in U.S. jurisdictions has subsided. The FATCA-generated financial information sharing between the U.S. and foreign governments spurred a global initiative, headed by the Organization for Economic Co-operation and Development (OECD), to implement similar information exchanges across the global community. In 2014, the OECD approved the Common Reporting Standard (CRS), under which at least ninety-five jurisdictions have agreed to the automatic exchange of financial information. The OECD based the provisions of CRS largely on FATCA, with the result that financial institutions around the world, including trusts and some business entities, share account ownership and other detailed financial information with participating governments. Although the U.S. joined the 2014 Declaration on Automatic Exchange of Information in Tax Matters, which endorses the general principles of CRS, it has not signed onto the Multilateral Competent Authority Agreement. The FATCA regime already provides the U.S. government with the information it deems useful; further, joining requires legislative action. Nevertheless, the U.S. has avoided being deemed non-cooperative according to OECD standards.