Private trust companies in Wyoming

Three kinds

Wyoming law names three kinds of trust company (W.S. 13-5-301). A public trust company is chartered to serve the public. On this site that is "a regulated trust company that serves the public," so it is not confused with a family's company. A chartered family trust company is chartered by the Banking Commissioner and serves family only. A private family trust company is not chartered, is not regulated by the Division of Banking, and serves family only.

The two family companies

Who counts as family

The designated relative is the person the family is counted from, living or dead (W.S. 13-5-301). An unregulated company has one. A chartered family trust company may have two. From that person, W.S. 13-5-301 counts family members out to the tenth degree of lineal kinship and the ninth degree of collateral kinship. A spouse and a former spouse of the designated relative, and of a person inside those degrees, are family members. So is a person within the fifth degree of lineal kinship of such a spouse or former spouse.

A legally adopted person is treated as a natural child of the adoptive parents. A stepchild is treated as a natural child of the family member who is or was the stepparent. A foster child, and a minor for whom a family member became legal guardian, are treated the same way. Children of a spouse of a family member are treated as natural children of that family member. Degrees are counted by steps, through the common ancestor when the kinship is collateral. A former spouse is in. A stepbrother is in if the statute's degree count reaches him. A person who is merely a friend is not. Key employees of a family affiliate are pulled in on the statute's own terms, which are narrower than the kinship list. Whether a particular person is inside the count is a question for counsel, with a family tree, not a question this page can answer.

The record

Nobody examines an unregulated company, so its own record is what shows it acted as a trustee should. Keeping that record is Somerell's work.

A family company or a public firm

Families look at a company of their own when someone will show up to meetings and keep minutes, and when the accounts will be in the company's name. If the board is not going to meet, the articles will exist and the trustee will not. That is a practical test, not a recommendation. Ask counsel whether this family will actually meet.

It is also the shape people study when they want to keep the investment adviser and the distribution arrangements they already have, instead of moving onto a public trust company's product list. A company survives a death or a move in a way one person often does not.

People hire a regulated trust company that serves the public when they don't want a board, and they don't want examinations on the family's calendar. They are paying for staff and a process. They also look there when a bank or a custodian has said it will only deal with a licensed trustee and will not wait. A smaller trust can make a private company the expensive choice. A board and someone to administer it cost money. If what you want is the public firm's investment platform, that firm has one. A family company does not come with one.

Where administration fits

If the family decides on a private company, we administer it, and we will tell you what a well-kept company's records and calendar look like without dressing that up. Your private trust company is the trustee, and we are not. We are not trying to take your lawyer, your accountant, or your investment adviser. If what you want is a trustee and you do not want a board, the office people hire for that is a regulated trust company that serves the public, which is not a service we offer.

Our focus is the unregulated company. We also administer the regulated, chartered family trust company. Whether the waiver of supervision is the right form is a Wyoming legal question. Ask counsel. It is not something this page can settle.

A common structure

A purpose trust with no beneficiaries often owns the company, so the family does not own the trustee. The company is trustee of the underlying trusts. Those trusts often own limited liability companies that hold the assets. The board, the advisers, and the administrator are not owners.

Governance

A board sits over the company. Investment and distribution committees, where the family uses them, take the decisions the instrument and the company's own papers give them. Officers carry out what the board has decided. Conflicts belong on paper: who is a beneficiary, who is paid by an affiliate, who must leave the room.

Family members commonly step back from distribution decisions on trusts they benefit from. Counsel's usual starting point on the tax side of that habit is IRS Notice 2008-63. It is a starting point for the lawyer, not a result this site can state. Ask counsel what it means for this company.

A year in the life

1. The calendar of meetings is set, and the papers go out before the board meets.
2. The board, or the committee that holds the power, decides. The minutes record the decision. They do not make it.
3. Directions on investments are recorded. Statements are reconciled to them.
4. Distribution requests are logged, sent to the person who holds the power, and matched to the payment after the decision.
5. The books are kept current enough that the accountant can prepare the returns, and that counsel can see what was signed.
6. Whatever the company must file is tracked to its date. Every Wyoming corporation and limited liability company has a Secretary of State annual report, due in the anniversary month of formation. A chartered family trust company is also examined at least once every three years (W.S. 13-5-607). An unregulated company is not on that examination calendar. Any other date comes from the instrument, the waiver, or counsel.

Setting one up

1. The family and counsel decide whether to form a company at all, and which Wyoming kind.
2. Counsel drafts the articles and the rest of the governing papers.
3. The company is filed. For an unregulated company, the directors or managers deliver the waiver the statute describes. For a chartered company, the chartering steps are counsel's and the Commissioner's.
4. The board chooses the bank and the custodian. Accounts are opened in the company's name.
5. The administrator prepares the file the board will use: the calendar, the minute book, the inventory, the list of dates. Somerell can be that administrator. The board still decides.

Questions for your lawyer

• What is the tax result of this company, including the questions in IRS Notice 2008-63?
• Does SEC Rule 202(a)(11)(G)-1, 17 C.F.R. § 275.202(a)(11)(G)-1, matter to the way this family invests? That rule can keep a family office out of the definition of investment adviser if it advises only family clients, is owned by family clients and controlled by family members or family entities, and does not hold itself out to the public. The SEC's definition of family is not Wyoming's definition in W.S. 13-5-301. Who answers the question is counsel, not this page.
• Where does state tax nexus actually fall, given where the family lives and where the work is done?
• What, if anything, may the company do for someone who is not a family member under W.S. 13-5-301?