Private Trust Companies (PTCs)

Jersey Private Trust Companies Establishment & Administration.

Private Trust Companies offer High Net-Worth clients an attractive planning alternative to the traditional professionally managed trust. At Fiduchi, we help clients understand the benefits and consequences of a PTC. We ensure the constitutional documents are drafted to best suit the clients’ objectives and provide ongoing oversight to manage any regulatory requirements.

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.

Private Trust Companies - How Fiduchi can help

At Fiduchi, our Private Wealth team work alongside numerous families on existing PTC structures as well as providing advice to families and advisors on how to set up a PTC structure to best manage financial assets across jurisdictions. Our director-led teams take the time to understand what truly matters to you, enabling us to deliver a personal and genuinely bespoke service. With over 30 years’ experience providing independent, trusted private wealth solutions, Fiduchi can support you in the establishment and ongoing administration of your PTC structures.

What is a Private Trust Company (PTC)?

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. PTCs offer families a significant degree of control and help them structure their affairs so as to allow for as much or as little participation by members as they wish. This can encourage generational participation in the family interests, and ensure that such participation is more strictly controlled. 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.

7 reasons why a HNW family should consider using a PTC

Families can retain a significant degree of control structuring their affairs so as to allow for as much or as little participation by family members as they wish.

  1. The PTC can be used to introduce the younger generation to the family interests and values whilst keeping control of such participation. This can be of significant value when the family business is held in an underlying trust.

  2. A PTC allows a business to be retained by the family through generations without the need for diversification (which may be required by a professional trustee);

  3. Commercial decisions for a business can be made more quickly and protocol set out on the roles of individuals in the family business.

  4. A PTC can act as trustee for various family trusts, thereby allowing an understanding of the overall family wealth, and management of that wealth, in a harmonised manner.

  5. Management of the PTC lies with the board of directors; a change of directors is usually less burdensome than a change of trustee. This can assist with succession planning.

  6. PTC’s help maintain confidentiality, rather than the use of a large and highly regulated international financial institution as a trustee.

PTC Structure

In order for a PTC to be effective, care must be taken at the outset to establish the structure properly, identifying who within the structure will be responsible for what. This is important from a regulatory viewpoint, as well as from a tax and legal perspective.

In addition, where several family members are involved with the activities of a PTC, care must be taken to highlight and manage any conflicts of interest. This is something that can be addressed from the outset under the terms of the constitutional documents, for example by introducing investment committees or setting specific voting rights.

Ownership of a PTC

Ownership of the PTC is clearly a key issue for most Ultimate Beneficial Owners (UBOs). The shares in a Jersey PTC can be held in a number of ways, but tax advice must be taken in this respect particularly if there is a requirement for a UBO to divest himself of control in order to satisfy tax requirements in his home jurisdiction.

Traditionally shares in a Jersey PTC have been held via a purpose trust. A purpose trust is usually non-charitable in nature; it can be charitable but would then need to comply with stricter requirements. Where non-charitable, a Jersey purpose trust must have 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. 

Board of Directors of a PTC

Aside from ownership, another core issue to consider when structuring the PTC is the composition of the board of directors. The UBO may wish to be on the board, or may want to appoint a team of trusted advisors, or he 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 designed into the constitutional documents of the structure at the outset, for example by requiring under the terms of the trust that 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. 

Regulatory

Under the Financial Services (Jersey) Law 1998 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):   

  • only provides trust company business services in respect of a specific trust or trusts (generally related to the same family); 

  • does not solicit from or provide trust company business services to the public; and

  • has its administration carried out by a person registered to carry out trust company business in Jersey, such as Fiduchi.

Following the introduction of the Schedule 2 of the Proceeds of Crime (Jersey) Law 1999, a PTC must comply with Anti-Money Laundering, Countering the Financing of Terrorism and Countering Proliferation Financing obligations. Fiduchi is well versed in these requirements and are able to support PTCs by providing the necessary engagement to cover these obligations on behalf of the PTC, thereby ensuring full compliance and supporting family board members in understanding the obligations.

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:

  • does not need to seek express exemption from regulation by the JFSC (the JFSC require only a letter to notify them of the existence of the PTC); 

  • does not have to submit an annual filing or pay any annual fee over and above the usual company returns;

  • does not specifically require management by a regulated service provider.

Conclusions on why HNW Individuals should consider PTCs

PTCs offer high net-worth families an attractive planning alternative to the traditional professionally managed trust. 

The possible uses are extensive and can simultaneously involve both commercial and philanthropic objectives. A PTC can be used to consolidate the administration of several family trusts, thereby conveniently managing and preserving family wealth and allowing the settlor to actively plan both his succession and the future ownership of family assets. 

A PTC can allow families to maintain greater control over its trusts and those trusts’ underlying interests. Additionally, the PTC structure can have a dynastic influence, allowing and encouraging the introduction of different generations into the management of the family’s affairs in a meaningful but strictly controlled way.

In order for a PTC to be effective it is important that the settlor’s wishes are understood at the outset and that these are consistently communicated to the relevant members of the family and the management of the structure. Bespoke trust deeds and company articles or other governing documents are used in order that each PTC structure can be set up precisely how each client wishes. However, communicating this to families, especially after the settlor’s death, is not always straightforward. Consideration must be given to this from the beginning and one established way of creating family awareness and acceptance is to agree a family charter, which sets out the principles and intentions of the settlor at the establishment of the PTC. These charters can be as informal as a family wishes and individual families can arrange them in whatever manner they choose, thereby reducing the chances of future disputes regarding the management of the PTC.

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