• Cassie Hoffman

WING Trust: Asset Protection and State Income Tax Savings

‘WING’ is an acronym for a Wyoming Incomplete-gift Non-Grantor Trust. It is an irrevocable trust structure primarily utilized as an asset protection and state income tax tool during a grantor’s life. And, unlike many other trust structures, the grantor can retain a beneficial interest in the trust’s assets.

During its existence, a WING is classified as a separate taxpayer from the grantor for income tax purposes – it files its own IRS Form 1041 fiduciary income tax return. This allows a WING to become a resident in a state with favorable trust income tax laws.

In addition, a WING is typically structured as a fully directed trust, meaning the trustee follows directives from both a distribution committee and trust advisor. Depending on the circumstance, the grantor may even be able to serve as the trust advisor, directing the investments of the trust.

Basic Requirements

In order for a WING’s assets to avail themselves to Wyoming’s asset protection laws and state income tax savings there are certain requirements that 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 can select the committee members. 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 a WING requires 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. 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 there is no intent to defraud creditors by transferring the property, 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.

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.


While there are no state income tax advantages achieved by placing an asset into a WING that produces state source income (a rental property, for example), there are instances where state income tax savings can be achieved, assuming the requirements listed within the Grantor’s Location section of this document are met. Such circumstances would include highly appreciated assets, ranging from closely held business interests to private equity to investment holdings and partnership and LLC interests. The most motivating circumstance is qualifying assets with an expected liquidity event in the future.


Depending on a grantor’s situation, there are several scenarios where a WING could be utilized to achieve both asset protection and state income tax savings. A common misconception is that trusts cannot be setup outside of the state of residence; however, this is not always the case. A qualified attorney should design and implement the process and it should always be kept in mind that tax laws frequently change and that circumstances should continually be evaluated.

Two Ocean Trust provides wealth management services to high net worth individuals, family offices, and advisers. We offer a full range of investment, trust and estate capabilities including the first comprehensive wealth management platform for digital assets.

Based in Jackson Hole and regulated by the Wyoming Division of Banking, Two Ocean Trust is uniquely positioned to provide access to Wyoming's low tax rates, favorable trust laws and unparalleled legal protections for digital asset investors. _______________________________________________________________________

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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Dustin Sventy

Chief Investment Officer

(307) 200-8442


Cassie Hoffman

Senior Trust Officer

(307) 200-8439


115 W Snow King Ave

PO Box 1114

Jackson, WY  83001

(307) 200-8430

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