Wyoming Trusts as the Most Powerful Tools for Holding Private Shares

By: Katie Cook and Harrison Sones

Executive Summary

For owners of shares in private companies, especially companies planning an initial public offering (IPO) or major liquidity event, deciding where and how to hold the shares is paramount. Wyoming may be the best jurisdiction in the world to hold that ownership, specifically through a Wyoming trust. Wyoming’s legislative strength and the trust’s efficacy produce a unique combination of advantages. First, Wyoming will not impose taxes of any kind¹ on shares placed into a trust (the “Shares”). Second, under Wyoming law, an owner or the owner’s adviser can retain complete voting control over the Shares while they are held by the trust.² This retained control preserves authority over all strategic and operational decisions, including those related to an IPO or other liquidity event. Additionally, the trust itself and Wyoming’s favorable legal environment combine to deliver effectively ironclad protection from creditors³, strong privacy⁴, exceptional flexibility⁵ and the ability to minimize the risk of litigation.⁶

Regarding litigation risk, a Wyoming trust may minimize such risk more effectively than any option offered in other states, an advantage that is especially important for Shares in valuable companies that receive substantial public attention. The rise of litigation in the U.S. has intensified to alarming levels: business‑related tort costs already absorb about 2.1% of U.S. GDP, roughly $529 billion, and have been rising nearly 9% per year since 2016.⁷ This rate far outpaces both economic growth and inflation. Such costs are not confined to companies alone; plaintiffs routinely extend their claims to major shareholders, senior officers, and even their trusts, arguing they should share the liability. Wyoming law minimizes the risk of these follow‑on claims by blocking or deterring them, and, through clear statutory rules, swiftly resolving any claims that may ultimately proceed.

To explain, Wyoming law automatically governs key matters directly related to a trust, regardless of the location of the private company. This automatic application of law places follow‑on claims under Wyoming jurisdiction, whose courts discourage weak cases and deliver prompt, statute‑based decisions, as detailed below. Wyoming's jurisdiction is ensured by the state’s choice-of-law statute: once a trust document selects Wyoming law, the meaning and effect of the trust terms will be determined under Wyoming law.⁸ Such trust terms include the trust’s capacity to hold, vote or sell the Shares, or any other issues central to follow-on claims.

To discourage spurious claims from being filed at all, Wyoming offers a specialized forum for trust and business disputes, while allowing defendants to divert cases from this forum to slower, costlier district courts. The specialized forum is Wyoming’s Chancery Court (the “Chancery Court”), which is distinct from the state’s general court system⁹; Wyoming is one of a limited number of states to possess such a court.¹⁰ 

Under Wyoming law, each party has 20 days to consent to Chancery Court jurisdiction. If a party does not object within 20 days, consent is deemed and the Chancery Court has jurisdiction over actions related to a trust¹¹. Blocking nuisance suits from the Chancery Court makes them economically unattractive. Therefore, facing higher costs and time delays in district courts as well as Wyoming’s overwhelmingly conservative judiciary¹², plaintiffs often abandon weak claims.

On the other hand, when a straightforward legal issue arises, the defendant may seek Chancery Court review for a prompt, statute‑based ruling. Wyoming’s Chancery Court hears matters of both law and equity.¹³ Accordingly, when a clear statutory remedy exists, the defendant can seek Chancery Court jurisdiction and a swift statutory decision. During 2024, the Chancery Court averaged 115 days to resolve a case.¹⁴  Wyoming produces such outcomes through two mechanisms: first, Wyoming’s predominantly conservative judges are likely to uphold the letter of law. Second, unique among American business courts, Wyoming’s Chancery Court statute mandates the resolution of the majority of cases within 150 days of the court-issued schedule for each case.¹⁵

By contrast, Delaware, one of the few other states with a stand‑alone Chancery Court, lacks the above advantages. Consent from both parties is not required.¹⁶ Additionally, Delaware’s Chancery Court functions as an equity court; the court only hears cases seeking a measure of equitable relief, either in part or in full.¹⁷ Moreover, Delaware’s judiciary is overwhelmingly liberal, with over 90% of sitting state judges appointed by Democratic governors.¹⁸ Finally, Delaware imposes no deadline for resolving most cases. Collectively, these elements create fertile ground for opportunistic, subjectively‑based trust challenges.

The data confirm both Delaware’s exposure and, conversely, Wyoming’s strong deterrence against unscrupulous challenges: in Fiscal Year 2023, Wyoming’s Chancery Court handled 31 new case filings, in comparison to 1,310 for Delaware during its 2023 Fiscal Year.¹⁹ This translates to roughly 0.06 filings per 1,000 entities in Wyoming versus 0.63 per 1,000 in Delaware, making litigation about ten times more common in Delaware.²⁰ In sum, frivolous cases are seldom filed in Wyoming, or, if filed, experienced judges render fast, disciplined rulings. Therefore, for sizable shareholdings in companies that naturally draw heightened public attention, Wyoming’s judicial environment materially lowers the risk of litigation relative to other states.

The precise method to achieve all of Wyoming’s key advantages is straightforward. Namely, an owner can establish a Wyoming Trust that owns a holding company. The holding company will usually be a Wyoming LLC. In turn, the Wyoming LLC holds the Shares. The owner or an adviser can retain the position of Trust Advisor of the Trust and/or Manager of the LLC, thereby achieving full control over voting the Shares and other investment decisions. “Trust Advisor” is a term used in Wyoming statutes and refers to the party that can be designated in a trust to hold full investment authority. It is clearly provided in Wyoming statutes that the Trust Advisor’s authority to direct investment decisions of the trust is absolute and binding on other persons, and the Trustee must follow the directions of the Trust Advisor.²¹

Owners of private companies increasingly utilize Wyoming for their Shares.²² Wyoming entities are the optimal choice; they provide maximum protection and tax efficiency, while allowing owners to retain control over operational decisions and liquidity events. Wyoming companies and trusts clear the runway for company growth and eventual sale.

Explanation

Please see below for a detailed description of the Trust and LLC arrangement, including an illustration, a closer look at the advantages outlined above, and descriptions of how those advantages apply in practice.

1. The Trust Design: Wyoming Trust → Holding Company → Shares
   

2. Core Advantages of Wyoming Trusts and Their Practical Applications for Private Shares

Category	Core Advantage	How the Advantage Applies in Practice
Tax	Zero tax.	Wyoming imposes no tax on income from the Shares or sales proceeds, unlike the high state tax that may apply if an owner personally holds the shares.
Asset Protection	Complete protection; creditors have no right to assets.	Shares are generally protected in the event of claims or disputes against the Company.
Privacy	The trust itself and the parties in the trust are not public record in Wyoming, ensuring maximum discretion for family members, particularly minors.	Family details remain private, even for highly publicized businesses.
Control	Clients and/or their advisers can control all investment and distribution decisions.	Trust Advisor controls voting for the Shares, via authority to appoint and remove the LLC Manager. Trustee not involved in decision-making. Distribution Advisor can be appointed to direct distributions.
Flexibility	Trusts can easily be terminated and certain provisions can be modified.	If a potential sale requires structural changes or  family needs shift, the trust can be modified or terminated swiftly, without court involvement.
Court System	Minimization of litigation risk.	Even while Company issues are handled through the Company’s home state, Wyoming courts alone will decide trust matters. Wyoming’s court system deters frivolous cases and delivers swift decisions based on statutes as written.
Continuity	Wyoming Trusts last up to 1,000 years.	Trusts are structured for longevity and designed to accommodate any transaction or planning event; no changes need to be made during or after a sale or IPO.

3. Expanded Information on Core Advantages
   

The core advantages are generally intuitive; however, asset protection, flexibility and continuity involve technical elements worth elucidating. This section further describes these elements.

I.               Asset Protection

• Trusts can be drafted to block all creditor claims, with the sole exception of overdue child support.²³

• This protection applies immediately upon formation. There are no waiting periods and no reliance on court discretion.²⁴

• The LLC adds a secondary layer of protection but is often redundant under Wyoming law as the trust provides the primary shield.²⁵

• The protection applies regardless of the type of assets in the Trust and LLC, and regardless of the level of investment control exerted by the settlor of the trust or the settlor’s advisers.²⁶

• Wyoming’s statute‑driven, conservative courts not only minimize litigation risk at the outset but also provide a strong forum if an asset protection trust is challenged.

II.             Flexibility

• Trusts can be amended or terminated based on mechanisms built into the trust document. When built-in mechanisms are insufficient, Wyoming law permits non-judicial settlement agreements (“NJSAs”), which allow beneficiaries and other interested persons to amend a trust without court approval.²⁷

• LLC operating agreements can be readily revised to change governance, distributions or other substantive provisions, often by use of a short written resolution.²⁸

• The above tools are essential for fast-paced events like sales and IPOs.
  

III.           Continuity

Wyoming enjoys one of the country’s most stable political climates.²⁹ Its voters consistently elect conservative representatives who enact and refine pro‑business and trust legislation.³⁰ These officials usually win by margins well above national averages, and the state’s favorable judicial environment and laws are widely expected to remain in place for the long term.

Conclusion

Wyoming offers the most robust and advantageous jurisdiction for holding shares in private companies, particularly for those planning an IPO or liquidity event. By utilizing Wyoming trusts, owners benefit from no state tax on shares, comprehensive asset protection, privacy, and significant control over voting and investment decisions. Wyoming’s legal system, with its specialized Chancery Court, minimizes litigation risk and facilitates expeditious, statute-driven rulings. Moreover, the state’s ongoing innovation of trust laws and the continuity of its legal environment make it an ideal choice for those seeking long-term, stable protection of their assets.

Footnotes

1. Wyoming levies no state income, estate, gift, or capital‑gains taxes. These levies are absent from Wyoming Statutes tit. 39, “Taxation and Revenue Code” (2025). https://wyoleg.gov/statutes/compress/title39.pdf

2. A trust may appoint an investment advisor with binding authority. Wyo. Stat. Ann. § 4-10-718 (2024).

3. Assets transferred to Wyoming trust are protected from creditors immediately – except for fraudulent transfers and past-due child support claims. Wyo. Stat. Ann. §§ 4-10-503(b), 4-10-510(b), 4-10-516(c)(i) (2024).

4. Wyoming law requires no trust registration; trustees may furnish a certification of trust, and any trust-related filings are automatically sealed. Wyo. Stat. Ann. §§ 4-10-1014, 4-10-408-4-10-205 (2024).

5. Wyoming permits (i) modification of an irrevocable trust by private agreement known as a non-judicial settlement agreement; (ii) waiver of routine benefciairy reports; and (iii) a retroactive asset-protection election for existing trusts. Wyo. Stat. Ann. §§ 4-10-111, 4-10-813(d), 4-10-516(a) (2024). Delaware, Nevada, South Dakota, and Tennessee require a new trust before protection attaches. 12 Del. C. § 3570(4) (2024); Nev. Rev. Stat. § 166.040 (2024); S.D. Codified Laws § 55-16-11 (2024); Tenn. Code Ann. § 35-16-102(4) (2024).

6. See notes 8–19 and accompanying text (Wyoming’s exceptionally low litigation rate).

7. Bussiness-related tort costs absorb about 2.1% of U.S. GDP (≈ $529 billion) and have been rising nearly 9% per year since 2016. U.S. Chamber Institute for Legal Reform & The Brattle Group, Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Court System, 8-10 (November 2024), https://instituteforlegalreform.com/wp-content/uploads/2024/11/2024_ILR_USTorts-CostStudy-FINAL.pdf.; Swiss Re Institute, Litigation Cost Drive Claims Inflation: Indexing Liability Loss Trends, 2 (September 7, 2024), https://www.swissre.com/dam/jcr:6bc7d3b7-0f42-4209-a01a-e22787b98685/sri-sigma4-2024-litigation-costs-claims-inflation-final.pdf.

8. Electing Wyoming law makes it exclusively determinative of trust validity, construction, administration, an dtrustee’s statutory powers – including holding, voting, and disposing of trust securities. Wyo. Stat. Ann. §§ 4‑10‑107(a)(i), 4‑10‑816(a), 4-10-815 (2024).

9. The Wyoming Chancery Court is a court of record for business and trust disputes. Wyo. Stat. Ann. §§ 5-13-101, 5-13-103, 4-13-115 (2024).

10. Other states with a separate chancery bench include Delware, Mississippi, and Tennessee. 10 Del. C. §§ 341-347 (2024); Miss. Const. Art. 6 § 159; Miss. Code Ann. § 9-5-81 (2023); Tenn. Code Ann. §§ 16-11-101, 16-11-103 (2024).

11. Unless the defendant objects within 20 days of service – the deadline for the first responsive pleading – consent of the Chancery Court jurisdiction is deemed. Wyo. Ch. Ct. R. 3.2(a)(1) (2024); Wyo. R. Civ. P. 12(a)(1)(A)(i) (2024); Wyo. Stat. Ann § 5-13-11(b)(xiv) (2024).

12. Roughly 85% of Wyoming’s sitting state judges are conservative appointees. The figure comes from matching each judge’s published appointment date to the governor then in office.

13. Chancery Court judges share concurrent jurisdiction with district judges. Wyo. Stat. Ann. §§ 5-13-103(b), 5-13-115(d) (2024).

14. Hon. Benjamin Burningham and Benjamin Norman, From Tar Heels to Cowboys: Pioneering Business Courts, Wyoming Lawyer, 24 (June, 2025).

15. The Chancery Court must resolve the majority of cases within 150 days of the scheduling order, and its judges must be “experienced and knowledgable” in commercial and trust matters. Wyo. Stat. Ann. § 5‑13‑104(h) (2024); Wyo. Stat. Ann. § 5‑13‑115(a)–(b) (2024); Wyo. Ch. Ct. R. Civ. P. 1(a)(1); id. § 5‑13‑108(a)(iii) (2024).

16. Delaware Chancery exercises automatic equity jurisdiction; party consent is not required. 10 Del. C. §§ 341-347 (2024).

17. The Delaware Court of Chancery possesses jurisdiction over “all matters of equity” and may not hear cases with an adequate remedy at law. 10 Del. C. §§ 341–342 (2024).

18. Over 90% of Delaware’s current state judges were appointed by Democratic governors. The figure comes from matching each judge’s published appointment date to the governor then in office.

19. The Wyoming Chancery Court logged 29 civil filings in FY 2023 (Dec. 1, 2022 – Nov. 30, 2023). Benjamin Raymond Norman and Benjamin M. Burningham, Recent Developments in Business Courts 2024, American Bar Association (March 7, 2024), https://www.americanbar.org/groups/business_law/resources/business-law-today/2024-march/recent-developments-business-courts-2024/; Delaware Judiciary, Court of Chancery Civil Caseload Summary FY 2023, https://courts.delaware.gov/aoc/annualreports/fy23/doc/Chancery%20Civil%20Caseload%20Summary.pdf.

20. Joe Rubino, Secretary of State Reflects on 2023 Accomplishments, Looks Forward to Serving the People of Wyoming in 2024, Wyoming Secretary of State (January 3, 2024), https://sos.wyo.gov/Media/2024/SoS_Release_2024-01-03.pdf; Delaware Division of Corporations: 2023 Annual Report, Delaware Secretary of State (2024),  https://corpfiles.delaware.gov/Annual-Reports/Division-of-Corporations-2023-Annual-Report.pdf.

21. Wyo. Stat. Ann. §§ 4-10-712(a), 4-10-718 (2024).

22. Joint Corporations, Elections, & Political Subdivision Committee, Business Division Update to Joint Corporations Committee, Wyoming Secretary of State (May 30, 2023), https://wyoleg.gov/InterimCommittee/2023/07-202305304-01SoSBusinessDivision-LanderJointCorps.pdf; Delaware Division of Corporations: 2023 Annual Report, Delaware Secretary of State (2024),  https://corpfiles.delaware.gov/Annual-Reports/Division-of-Corporations-2023-Annual-Report.pdf. 

23. Assets transferred to Wyoming trust are protected from creditors immediately – except for fraudulent transfers and past-due child support claims. Wyo. Stat. Ann. §§ 4-10-503(b), 4-10-510(b), 4-10-516(c)(i) (2024).

24. A Trust can be drafted to protect against creditor claims. See Wyo. Stat. Ann. §§ 4-10-502(c), 4-10-504(b) (2024).

25. A Wyoming LLC adds an extra productive layer: a creditor’s exclusive remedy is a charging order against distributions; the creditor cannot seize or force the sale of the LLC’s assets. Wyo. Stat. Ann. § 17‑29‑503(g) (2024).

26. Id.; See Wyo. Stat. Ann. § 4-10-718 (2024).

27. Wyoming law permits non-judicial settlement agreements (“NJSA”) which allow beneficiaries and other interested persons to amend a trust without court approval. Wyo. Stat. Ann. § 4-10-111 (2024).

28. The Wyoming Limited Liability Company Act treats the operating agreement as a private, highly flexible contract and permits amendments by unanimous written consent unless the agreement provides otherwise. Wyo. Stat. Ann. §§ 17-29-110(a)(iv)-(vii), 17-29-407(b)(v), 17-29-407(d), 17-29-112(a) (2024).

29. State & Legislative Partisan Composition, NCSL: National Conference of State Legislatures (January 31, 2011), https://documents.ncsl.org/wwwncsl/Elections/LegisControl_2011.pdf; State & Legislative Partisan Composition, NCSL: National Conference of State Legislatures (April 3, 2025), https://documents.ncsl.org/wwwncsl/Elections/Legis_Control_2025_4.30.25-v2.pdf.

30. 2022 General Election Results, Wyoming Secretary of State, https://sos.wyo.gov/Elections/Docs/2022/2022GeneralResults.aspx; 2018 General Election Results, Wyoming Secretary of State, https://sos.wyo.gov/Elections/Docs/2018/2018GeneralResults.aspx; 2014 General Election Results, Wyoming Secretary of State, https://sos.wyo.gov/Elections/Docs/2014/2014GeneralResults.aspx; 2010 General Election Results, Wyoming Secretary of State, https://sos.wyo.gov/Elections/Docs/2010/2010GeneralResults.aspx; File No. S0125, Enrolled Act No. 39, 65^th Legislature of the State of Wyoming, 2019 Gen. Sess. (Wyo. 2019), https://www.wyoleg.gov/Legislation/2019/sf0125; File No. SF0127, Enrolled Act No. 85, 67^th Legislature of the State of Wyoming, 2023 Gen. Sess. (Wyo. 2023), https://www.wyoleg.gov/Legislation/2023/SF0127.

Disclosures:

The Wyoming advantages discussed in this article apply only under Wyoming law. Federal and other state laws can still impose taxes, creditor remedies, disclosure duties, or duration limits. A Wyoming structure should be assessed as part of an integrated federal and multi-state tax and legal plan.

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