Private trust companies
A Private Trust Company is, essentially, a company formed for the specific purpose of acting as trustee of a single trust or group of related trusts. It is not uncommon for settlors to wish to retain some degree of control over the assets they establish in trust and this is sometimes accomplished by reserving specific powers under the terms of the trust. However, such a course has risks and, in some cases, the courts have ruled that trusts are a sham. This can have unintended tax consequences and can expose assets to creditor claims. Another means of retaining influence could be to appoint family members of the settlor or their financial advisers as trustees. This is not always possible, as the trust can therefore be treated as a tax resident where these people live.
With a Private Trust Company, the settlor, their family members or their advisers can be appointed to the Board of Directors and in this capacity are in a position to influence the way the trust is managed. The composition of the Board can be changed from time to time to incorporate members of future generations and, in this way, involve them in the management of family affairs. Generally, the company itself will be managed by a trustee in the chosen offshore location who will be represented on the Board.
A professional trust company will often not be in a position to offer the settlor the degree of flexibility and speed of response they are looking for and their employees cannot be expected to be as familiar with the business of trust-owned companies as they will be. members of the family. Decisions may need to be forwarded internally and independent advice taken before they can be implemented. If a change of administrator is desired, it can be a lengthy and costly process. However, with the Private Trust Company, problems like these can be largely avoided. People familiar with the business make the decisions and a change of direction for the administration of the trust can be achieved by changing the Board of Directors of the Private Trust Company.
Although it all seems straightforward, there are a few other considerations to keep in mind. All major overseas locations now have a professional trustee licensing scheme and the Private Trust Company may have to apply for a license. This means that not only will your owners and officers have to qualify, and the proposed changes will be approved in advance, but also that ongoing compliance formalities could be onerous. The directors should also remember at all times that when making decisions regarding the trust; it is the interests of the beneficiaries as a whole that must be taken into account. They should not be unduly influenced by their personal circumstances, which is not always easy. However, the Private Trust Company is the right solution in the right circumstances.
Ref: CO270406