Private Trust Companies: An Alternative Approach for Wealthy Families
Trusts are one of the primary vehicles used for passing wealth from one generation to the next. The trustee of a trust is responsible (directly or indirectly) for productive asset investment, sound decisions on beneficiary distributions, protection of the trust corpus, and timely, accurate completion of financial reports and tax returns.
For some families, establishing a private trust company to act as trustee may be an alternative to the more traditional institutional bank or individual trustee arrangement.
In this article, we address some of the pros and cons to establishing a private trust company and some questions for families to consider as they evaluate a private trust company. The article discusses:
- What a private trust company is, and how it differs from a bank or individual trustee.
- Circumstances in which it may be beneficial to consider a private trust company, and some of the risks.
- What a family and its advisors should consider when selecting a jurisdiction.
- Structural and governance issues the family should consider in order to avoid adverse estate tax consequences.
- Associated costs and evolving tax rules to consider.