by Amy Staehr, Partner, Long Reimer Winegar Beppler LLP; Aaron Lyttle, Associate, Long Reimer Winegar Beppler LLP; and Robert Cornish, Partner, Wilson Elser Moskowitz Edelman & Dicker LLP
The EB-5 Immigrant Investor Program has enabled a steady influx of new investment in the U.S. economy while providing international investors with a pathway to permanent U.S. residency. However, the program’s popularity, combined with a limited number of available visas, has resulted in a substantial backlog of visa applications. Many EB-5 investors now face a retrogression period, in which they must wait for an available visa, even after their EB-5 investment project has wrapped up. As the pool of EB-5 investors waiting to receive visas grows, so does the dollar value of funds invested in the U.S. which must remain “at risk” throughout the application period. This has raised the question of the most advantageous way to hold such funds prior to final approval of an investor’s Form I-829 petition.
Wyoming trust structures provide an effective vehicle for holding and administering assets in connection with the EB-5 Immigrant Investor Program. After an EB-5 project is completed, the return on investment can be transferred to one or more trusts for the benefit of the investor’s family which are administered by a Wyoming single-family private trust company. The result is a structure that maximizes investment flexibility and minimizes the expense and difficulty of regulatory oversight and mandatory federal or state registration. The trust assets—the return on investment—can then be invested and held “at risk” until the investor receives permanent resident status. Due to Wyoming’s favorable trust laws, non-existent state income tax, and allowance of completely unregulated trust companies, this model provides a cost-effective approach to holding the proceeds of EB-5 investments while investors wait to receive their permanent green cards.
The EB-5 Program and the Retrogression Problem
The EB-5 Program provides qualified investors with a path to permanent resident status in the United States. An investor makes a standard capital investment in a new commercial enterprise, which must generally create ten new full-time jobs per investor. If the investor makes a qualifying investment and completes the program, the investor and his or her family receive lawful permanent resident status in the United States.