A PTC is a company which is incorporated for the sole purpose of acting as trustee to one or more trusts for a family group. A HNW family may prefer to incorporate a PTC to act as Trustee of their family trusts rather than using a service provider’s professional trustee company.
PTCs offer a range of benefits - here are seven:
The ultimate beneficial owner (UBO) may wish to be on the board, or may want to appoint a team of trusted advisors, or they may simply wish to be able to exercise a veto over such matters.
It is possible for the UBO to exercise considerable control over this aspect of a Jersey PTC, but the usual considerations must be given to the tax and privacy rules of the UBO’s home jurisdiction and those of the proposed directors.
Control of the board can be set out in the constitutional documents of the structure at the outset, for example, setting the terms of the trust so the trustee is required to seek the approval of the settlor or enforcer when appointing/removing directors of the PTC.
Alternatively, the articles of the PTC may include various requirements, such as an obligation on directors to abstain where there are conflicts of interest. It is recommended that the regulated financial services provider being used for the administration of the PTC have representation on the board of the PTC.
This ensures that the PTC is able to evidence experience of trust management on its board and allows for family appointed directors who may have little personal experience of dealing with trusts, to rely on that expertise.
The shares in a Jersey PTC can be held in a number of ways, tax advice must be taken in this respect particularly if there is a requirement for a UBO to divest themselves of control in order to satisfy tax requirements in their home jurisdiction.
Traditionally shares in a Jersey PTC have been held via a purpose trust, which has the sole purpose of holding the shares in the PTC. A purpose trust is usually non-charitable in nature and, in Jersey, there is a requirement to appoint an enforcer. An enforcer is an individual appointed to enforce the terms of the purpose trust. Typically, a UBO will appoint a trusted family advisor to this role.
Increasingly, PTCs are being owned by foundations or foundations themselves are being established to fulfil the role of trustee directly (Private Trust Foundations (PTFs)).
A Jersey foundation is an incorporated separate legal entity. However, as with a purpose trust, the Jersey foundation is an ‘orphan’ vehicle. It does not have shareholders, beneficiaries or any other type of owner.
This, coupled with the fact that it can exist in perpetuity, means that succession planning is much easier and the risk of probate issues is mitigated.
A PTC may be owned directly by the UBO or their family, however the potential tax and/or succession consequences of that ownership would need to be fully investigated.
Under the relevant Jersey legislation, any person who carries out trust company business in the Island must be registered by the Jersey Financial Services Commission. PTCs are exempt from this requirement provided that the PTC (in general terms):
Once a Jersey PTC satisfies the requirements, it is subject to relatively light touch regulation compared both to regulated Jersey trust companies and to PTCs in some other jurisdictions. For example, a Jersey PTC:
Based on research conducted in November of last year by Hubbis, in conjunction with Jersey Finance, there is an estimated USD 1 trillion due to be passed down in the next decade from older Middle Eastern patriarchs and matriarchs to the younger generation.
Fiduchi is a regulated provider of trust and company services, and therefore its experts are able to assist you in all aspects of ensuring continued compliance in the constant changing landscape. At Fiduchi we take a pragmatic approach to ensure your interests, whether personal or business, are safeguarded. Because of this, we don’t apply a ‘one size fits all’ methodology, rather the contrary. Our director led teams will assess your needs to ensure we take into consideration all your requirements and provide the bespoke service you require.