Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Delaware | Wyoming |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 100 Perpetual Higher | 95 1,000 years |
State Income Tax Does the state impose income tax on trust income? States with no income tax or favorable trust taxat... | 85 No tax with conditions | 100 No state income tax Higher |
Asset Protection How strong are the state's Domestic Asset Protection Trust (DAPT) laws? Key factors include statute ... | 88 Strong DAPT with 4-year statute of limitations | 90 Strong DAPT with 2-year statute of limitations Higher |
Directed Trust & Trust Protector Does the state have robust statutes for directed trusts (separating investment and distribution duti... | 100 Most comprehensive directed trust statutes in the US | 100 Comprehensive directed trust and trust protector statutes |
Decanting Flexibility How easily can trust terms be modified through decanting? Broader decanting powers allow for greater... | 95 Broad decanting powers with 60-day notice | 95 Broad decanting powers |
Delaware abolished the Rule Against Perpetuities for interests in trust property effective July 1, 1995. Trusts can continue indefinitely with no durational limit, making Delaware one of the premier dynasty trust jurisdictions.
Wyoming abolished the Rule Against Perpetuities in 2003, allowing trusts to last up to 1,000 years. While not perpetual, this effectively provides dynastic duration for any practical planning purpose. The 1,000-year limit applies to both real and personal property.
Delaware does not tax trust income if: (1) all current beneficiaries are non-Delaware residents, (2) there is no Delaware-source income, and (3) trustee location alone does not create tax nexus. Delaware statutory trustees/directed trustees do not create income tax liability by themselves.
Wyoming's constitution prohibits state income tax. This applies to individuals, corporations, and trusts. Trust income is not taxed at the state level regardless of trustee location, beneficiary location, or grantor residence.
Delaware's DAPT statute requires creditors to prove fraudulent transfer by 'clear and convincing evidence' - a higher standard than typical civil cases. The 4-year statute of limitations (or 1 year from discovery, whichever is later) provides strong protection after seasoning.
Wyoming enacted its Qualified Spendthrift Trust statute in 2007. The 2-year statute of limitations for fraudulent transfer claims is competitive with South Dakota and Nevada. Self-settled spendthrift trusts are permitted.
Delaware is widely recognized as having the most sophisticated directed trust statute in the nation. The statute allows complete separation of administrative, investment, and distribution functions with explicit liability protection. Trust protectors can be granted broad powers and are not fiduciaries unless the trust instrument provides otherwise.
Wyoming has comprehensive directed trust and trust protector statutes enacted in 2011 and expanded since. The statutes allow complete separation of trustee duties with explicit liability protection. Trust protectors can be granted broad powers including modification of trust terms, removal of trustees, and change of situs.
Delaware's decanting statute is one of the most permissive in the nation. Trustees with discretionary distribution authority can decant to new trusts with modified terms, extend trust duration (perpetual in Delaware), and change situs. No court approval required.
Wyoming's decanting statute (enacted 2013) provides broad powers. Trustees with absolute discretion can decant to new trusts with virtually any modified terms. Even trustees with limited discretion can change administrative and governance provisions. No court approval required.
Wyoming for simplicity and low cost. Delaware for complex trusts and legal sophistication. Most people should choose Wyoming.
Your trust is genuinely complex, you expect litigation, or you're working with Delaware attorneys.
You want simple administration, low fees, no income tax, and your trust is straightforward.
Delaware's prestige is earned but often unnecessary. Wyoming does 95% of what most trusts need at half the complexity. Pick Delaware only if you have a real reason.