Mr. and Mrs. G called me regarding their existing Wyoming trust. While the trust agreement is in place, and on its review with me, does not need to be revised, there are assets--personal property and real property--that are still owned by Mr. and Mrs. G. individually. The Gs thought their assets were transferred into their trust, but on trust review, they are not. What does that mean?
Let's talk about the real property first.
In Wyoming, the statutes provide guidance on how real property should be "titled" to effectively transfer it into your trust. As a general rule, most of your assets should be transferred into your trust. And, there are specific planning tools in Wyoming in which it would be a better plan to have your real property owned by a limited liability company, or series limited liability company, as discussed in this law info article. I would be pleased to speak to you as to when that is the best plan, and is called double protection using a limited liability company. Sometimes, though, your real property should be in your trust.
In Mr. and Mrs. G's case, the deed to their home is titled in their names individually. They have a trust, and both of them are trustees. This is the only real property they own. In their case, based on review by me, the real property should be transferred into their trust. In Wyoming, W.S. 34-2-122 requires that all instruments conveying real estate or interests therein, in which the grantee is described as the trustee, the instrument "shall also define the trust or other agreement under which the grantee is acting. It shall be sufficient to define a trust by providing in the text of the instrument the name of the trustee, the name of the trust, the date of the trust or other agreement". Otherwise, the description of a grantee in any representative capacity in each instrument of conveyance shall be considered and held to be a description of the grantee only".
In other words, the grantee should be the name of the trustee, the name and date of the trust, and the county and state in which the trust was created. And if the deed does not indicate those items, the property is determined to be owned personally by the grantee. Trust property in the name of the trustee and owned only in that capacity shall not be subject to execution for the grantee's individual obligations.
The importance of titling the real property properly cannot be overstated. In the case of Mr. and Mrs. G., the current ownership of their real property, in their individual name, would not be protected by their trust and would be considered to be owned by them individually. This means that a judgment creditor could attach a lien on the property. It also means that their trust is not properly funded. In Wyoming, in order to be a valid trust, the trust must be funded--it must have assets. In the G's case, a warranty deed was prepared with both of them as grantors and conveying the property to them as grantee of their trust. The deed was recorded in the county records. This properly transfers the real property to the trust for trust protection and ensures the trust is properly funded.
Next, let's examine how the G's transferred their personal property into their trust.
Transfer of personal property into the trust.
The G's have personal property and in order to protect that property, it should be in their trust. Wyoming statutes provide that personal property "shall be in the name of the current trustee, the name of the nominee of the trustee or the name of the trust".
The personal property of Mr. and Mrs. G is held by them as tenants by the entireties. If they convey it to a joint trust, the property shall have the same immunity from the claims of their separate creditors as it would if it had remained held by the entireties, so long as they are both living and remain as husband and wife, the property continues to be held in trust for their benefit, and the trust instrument provides that this subsection applies to the property. This is distinctly different from joint ownership outside a trust as discussed in this law article. And, after the death of the first of the husband and wife to die, all property held in trust that was immune from the claims of the decedent's separate creditors immediately prior to the death shall continue to have the same immunity from claims of the decedent's separate creditors as would have existed if the husband and wife had continued to hold the property conveyed in trust or its proceeds, as tenants by the entirety.
That means there is no question that property, both real and personal, has much better protection if it is in the trust.
The takeaway: Please review your trust and its Schedule, which should indicate what assets are transferred into your trust and the date the asset was transferred. You can review ownership of your beneficiary designations and how to own your bank accounts.
I would be pleased to speak with you for a free consultation regarding your trust assets, by telephone or videoconference at 307.200.1914.