A Private Trust Company (PTC) is a Company which is established with the sole purpose of acting as a corporate trustee to a trust or a number of connected/related trusts (eg Trusts with common Settlors or Beneficiaries).
PTCs are commonly used by High Net Worth (HNW) families as a key plank of their wealth management (and succession planning) strategy, for a number of reasons:
- They deliver confidentiality
- They provide a comprehensive framework under which family members can be involved in decision making (by being on the board of the PTC)
- They can avoid the complications of succession law ie when used in conjunction with a tailored Offshore Trust or Offshore Private Foundation
- They reduce management costs (ie there’s no need to engage or pay a Private/Outside Trustee)
- They provide protection from fiduciary risk (ie a PTC eliminates the chance of an external Trustee turning rogue and stealing or wasting assets).
As long as certain criteria are fulfilled the PTC will not have to obtain a licence to carry out trust company business. The speed at which a PTC can be established, and the relatively low cost of operation have made PTCs extremely attractive to HNW families and their advisors.
A PTC’s sole purpose is usually to act as trustee of a trust (or group of trusts) belonging to a family or commercial group; these trusts may be family succession-oriented, commercial or philanthropic in their aims.
A PTC can be particularly useful for wealthy families who either do not wish to relinquish control to professional trustees or where the trust fund is to be invested in assets, which a professional trustee may be reluctant to deal with, such as works of art or family businesses.
For maximum confidentiality it would be preferable to register your Private Trust Company as an IBC in a privacy haven (ie somewhere which does NOT have a publicly accessible Register of Directors or Shareholders or Beneficial Owners – contact me for details of which jurisdictions meet that criteria).
A Private Trust Company is commonly deployed to act as Trustee of a Purpose Trust or as Councillor of a Purpose Foundation (ie a Trust/Foundation which is established purely for the purpose of holding a particular asset).
Given their nature and structure Purpose Trusts and Purpose Foundations (as they do not have to name specific beneficiaries) can deliver cutting edge asset protection and tax minimisation possibilities (more on that next week).
Local laws can have an impact. Hence it would be wise to seek local tax/legal/financial advice before committing to set up a PTC.