A Private Trust Company (PTC) serves as a trustee for one or more trusts established for an individual or a connected group of individuals, typically a family. A PTC does not provide trustee services to the general public, as the name implies. Family members can participate in decision-making when a PTC serves as a private trustee. Family members can also serve on the PTC’s board or advisory committees.
A PTC can thus serve as a family governance tool and provide bespoke trustee services. PTCs are generally exempt from the full licensing requirements that many jurisdictions impose on companies conducting trust business. Keep reading to learn why using a Private Trust Company is advisable!
But first, how does a Private Trust Company (PTC) in Wyoming work?
Private trust companies are intended to protect family wealth, including business assets, real estate, private equity, hedge funds, etc. The trustee manages these assets per the wishes of the family.
Family members can help manage the trust daily, though the trustee usually handles this. It frees up the family’s time to devote to other activities such as wealth preservation, philanthropy, or other financial objectives.
Wyoming private trust companies also alleviate the stress of succession planning. There is no need to name one or more successor trustees because the trust company is intended to be a permanent trustee.
Why use a Private Trust Company in Wyoming?
You control who has access to personal information, just like in a single-family office. The family ultimately decides who is appointed to the PTC’s board of directors and administration, and family members may be nominated for certain positions. While you cannot control everything and everyone, you have fewer people in contact with sensitive information than a typical industry player.
Savings on expenses.
Although there are some one-time costs associated with establishing a PTC, the ongoing administration costs of a PTC can be significantly lower than the annual fees of a traditional corporate trustee.
In Wyoming, for example, the capital requirements for a PTC are minimal, and no full-time employees or a staffed office are required. A sufficient connection with the state can be established by hiring a Wyoming service firm to keep the books and records, keep the PTC in good standing, and, if necessary, serve on the PTC’s board of directors. This results in significant cost savings compared to traditional corporate trustee relationships
Sound estate planning is a combination of strategy and execution. Both aspects of the family wealth preservation framework can be unified with PTCs. The most obvious advantage is that discussions about changing the trustee are no longer necessary. Because they own it, the family becomes a part of the decision-making process and can develop a closer relationship with the trustee. This may also help to avoid contentious situations in which beneficiaries are unhappy with a trustee’s decision.
Management of risks.
You also can transfer the PTC’s administration to a professional trustee if circumstances change while keeping it separate from the professional trustee’s other activities because trusteeship would remain with the PTC. In some ways, if you were exposed to critical events such as data leaks, reputational incidents, or regulatory issues, you would share your and your client’s fate with a professional trustee. With a PTC, you only run and manage your own risks rather than relying on externalities beyond your control.
Personalized and adaptable services.
Trusteeship decisions are typically the result of a lengthy process involving legal and compliance departments and the various levels of review. Regulatory pressure on trustees has steadily increased in recent years, resulting in a strict policies and procedures framework. Professional trustees are, without a doubt, guided by the settlor’s wishes, but they are not always aware of all circumstances and relevant factors. As a result, they may seek court assistance in a lengthy process.
A private trust company can streamline decision-making, resulting in faster results. Since it only administers trusts for a single family, it can focus on fewer scenarios and be more attentive to their specific needs than professional trustees.
As a result, flexibility may be an advantage over professional trustees. And it goes beyond administration to include holding assets that professional trustees may be hesitant to hold. Furthermore, the family has greater control over the trustee’s activities and the assets held in trust structures.
PTCs reduce fiduciary risk by incorporating a limited liability business entity as trustees. Furthermore, advisors who are otherwise barred from serving as trustees may be able to participate as an officer, members of the Board of Directors, or a committee member.
Better investment opportunities and management.
Most PTCs are formed by families with large pools of liquid assets managed in a commingled fashion. The PTC structure can make it easier to create investment vehicles like common trust funds, thus allowing various types of trust to access asset classes with higher minimums.
Since investment managers view the common trust fund as a single entity rather than individual investor trusts, these vehicles can offer better pricing and lower investment minimums. Thus, regardless of their size, family trust accounts can invest in assets like private equity funds that would otherwise be inaccessible.
Private trust companies, also known as family trusts, are designed to meet the estate planning needs of wealthy families. The structure of private trust companies is more adaptable than a traditional trust. This type of trust entity differs from making a revocable living or a simple testamentary trust. As a result, it’s a good idea to consult with a financial advisor or a trust and estate planning attorney first. Your estate planning attorney will guide you through the best way of establishing a private trust company.
At the same time, a financial advisor can assess your situation to determine whether a family trust company is appropriate for you. It will ensure that your Wyoming trust is well-managed and maintained. You will also have a say in your trust’s decisions. Visit this trusted resource to learn more about creating a Private Trust Company (PTC), particularly in Wyoming.
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