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  • Writer's pictureCassie Hoffman

WING Trust: Asset Protection and State Income Tax Savings

Looming federal tax increases on top of high state income taxes in many US states are driving increased interest in the Wyoming Incomplete-gift Non-Grantor Trust (“WING”)

A WING trust is an irrevocable trust primarily utilized as an asset protection and state income tax tool during a grantor’s life. As an incomplete gift, the assets within a WING are included in the grantor’s estate upon passing. However, unlike many other trust structures, the grantor is able to retain beneficial interest in the trust’s assets.

During its existence, a WING is classified as its own taxpaying entity for federal and state income tax purposes, which means that it files its own IRS Form 1041 fiduciary income tax return and pays its own income taxes. This designation also allows a WING to be domiciled in a jurisdiction with no state income or capital gains tax, like Wyoming.

In addition, a WING may be structured as a directed trust, meaning that the trustee follows directives from both a distribution committee and a trust advisor. Depending on circumstances, the grantor may even serve as the trust advisor, directing investments on behalf of the trust.

Basic Requirements

For a WING to benefit from Wyoming’s strong asset protection laws and state income tax savings certain requirements must be met:

Qualified Trustee

A WING must have a ‘qualified trustee’ that meets the requirements set forth in Wyoming Statute 4-10-513. These include appointing a Wyoming trustee to maintain and arrange for custody in Wyoming of some or all of the qualified trust property, maintain trust records and materially participate in the administration of the trust.

Distribution Committee

A WING also requires a distribution committee. It should be comprised of a minimum of two members, not including the grantor, but committee members can be changed over time and the grantor may select the committee members, although committee members must also be a beneficiary. While grantors typically select adult children or close family members, others may also be appointed.

Qualified Transfer

The assets placed into a WING must be considered a ‘qualified transfer’ and it is required that a grantor execute a qualified transfer affidavit, summarizing the criteria that must be met to be deemed a qualified transfer. The affidavit generally attests to the fact that the property being transferred into the trust will not render the grantor insolvent or currently subject to any creditor claims. To fulfill this requirement is it commonly advised that the grantor should not transfer more than 50% of their net worth at any one time. The affidavit also states that the property was not derived from unlawful activities and that the grantor has the right and authority to transfer the property, among a few other items. A qualified transfer affidavit must be executed with each transfer of assets into the trust.

Grantor’s Location

States have the latitude to design and implement their state income tax systems, which can complicate the determination as to whether a WING trust is a viable option for a grantor. The below outline, adapted from “Constitutional Challenges to State Taxation of Non-Grantor Trusts,” by Charles E. McWilliams, Jr., does an excellent job summarizing each state’s position.

  1. No state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

  2. No tax if no resident trustee and no administration in the state, generally applies: Arizona, Colorado, Hawaii, Indiana, Iowa, Kansas, Kentucky, Mississippi, Montana, New Mexico, New Jersey, Oregon, South Carolina, and Utah.

  3. No tax, same as above but must also not use the state law as governing law: Louisiana.

  4. No tax, if no administration in the state and no real or tangible personal property in the state: Idaho.

  5. No tax, as long as a beneficiary is not a resident: Delaware, Georgia, New Hampshire, North Carolina, Rhode Island, and Tennessee; and this is where the analysis begins to get more complicated since a determination of the beneficiaries is now required and the states have different rules on who constitutes a beneficiary (must it be a vested interest, or is a contingent beneficiary sufficient) and what contacts are required to qualify as a resident.

  6. No tax, same as above, but there must not be a resident trustee or administration in the state: North Dakota and California.

  7. No tax, as long as the settlor was not a domiciliary when the trust became irrevocable and no beneficiary is a domiciliary during the current tax year: Alabama, Missouri, and Ohio.

  8. Tax, unless the settlor was not a domiciliary at the time the trust became irrevocable or when additional property was contributed to the trust: Arkansas, Connecticut, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nebraska, Oklahoma, Pennsylvania, Vermont, Virginia, Washington D.C., West Virginia, and Wisconsin. This rule is quite harsh and has been challenged on Due Process and Commerce Clause grounds (sometimes successfully).

  9. Taxation when the settlor is a resident during the current year: Maryland.

  10. Taxation of every ING as a grantor trust, with statutes to specifically attack ING trusts: New York. New York also implemented a “throwback rule” to tax distributions in the future by a non-grantor accumulation trust. California has recently considered similar legislation but, as of today, no such laws have been passed.


While there are no state income tax advantages achieved by placing an asset into a WING that produces state source income (rental property, for example), there are many instances where state income tax savings can be achieved, assuming the requirements listed within the grantor’s Location section of this article are met. Such circumstances include highly appreciated assets, ranging from closely held business interests to investment holdings and partnership interests.

Low-basis digital assets, with significant or expected appreciation, have become an increasingly popular asset class to place into a WING as well. For more information on how a Crypto Optimized Incomplete-gift Irrevocable Non-Grantor Trust (COIN Trust™) can provide a generational wealth management solution for high-net worth owners of digital assets visit:


A WING can be utilized to achieve both asset protection and state income tax savings in many instances. A common misconception is that trusts cannot be setup outside of one’s state of residence; however, this is not always the case. A qualified attorney should design and implement any estate plan. Also, keep in mind that tax laws frequently change, and circumstances should continually be evaluated.

About Two Ocean Trust

Two Ocean Trust was founded to serve private clients whose assets are multi-generational. We provide investment management and trust services to ultra-high net worth individuals, private family trust companies, and foundations. Based in Jackson Hole, Two Ocean Trust is uniquely positioned to provide access to Wyoming's tax advantages, modern trust laws, and enhanced privacy and asset protections.


Two Ocean Trust LLC and its representatives do not provide tax or legal advice. This article was written to provide general information and for educational purposes. A qualified estate planning attorney, and possibly an accountant, should address your particular needs and specific legal and financial situations.


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