Private Trust Companies – Part 2
Benefits, Structures and the Role of Foundations
If a Private Trust Company (PTC) is established with a foundation as the “top of the tree”, the wealth structure will typically look something like this:
The Structure in Practice
Administrator: A licensed and regulated trust and corporate service provider (TCSP).
TCSP support: Provides administration to the Foundation, the PTC, and the Trust(s).
Directors: TCSP provides most directors to the PTC.
Client: Founder of the Foundation, Enforcer, and Settlor of one or more trusts. They may also act as a director of the PTC, alongside family members or nominated professionals.
Protectors: Nominated by the Settlor for the trusts.
Benefits of Using a PTC
The perceived advantages of establishing a PTC include:
Flexibility in managing family affairs.
Consolidation of assets, both business and personal, under one trustee.
Influence without ownership: The settlor and family can be directors without directly owning the PTC.
Limited liability for shareholders/members, with fiduciary duties still applying.
Enhanced wealth protection and succession planning, outside the settlor’s estate (avoiding probate and inheritance laws).
Continuity of trusteeship, avoiding disruptions caused by illness, retirement, or corporate closures.
Reduced costs and time when changing trustees.
Mitigation of tax concerns, by distancing management and control from the settlor’s jurisdiction.
Foundation vs Purpose Trust as Owner of a PTC
Why choose a foundation over a purpose trust to own a PTC?
No equitable interest: Like a purpose trust, no family member has a direct interest in a foundation’s assets.
Legal personality: A foundation is a separate legal entity in the Isle of Man, capable of suing, being sued, and giving security.
Beneficiaries: A foundation can benefit specific persons, unlike a purpose trust.
Flexibility: Beneficiaries can be changed without triggering tax issues, as they hold no direct or indirect interest.
Risk containment: With a foundation, liabilities sit with the foundation itself, not its trustees.
Family Offices and PTCs
Some family offices administer trusts directly, with internal teams supported by external professionals (accountants, lawyers, or regulated TCSPs). A PTC is not always essential, but it is often a valuable part of a comprehensive family wealth structure.
While not a “one size fits all” solution, a PTC can provide significant advantages for families seeking control, protection, and succession planning across generations.
Conclusion
A Private Trust Company supported by a foundation is a structure worth considering for families managing significant wealth and trusts. Its flexibility, continuity, and protection benefits make it a cornerstone of modern succession planning.
For more information or tailored advice on Private Trust Companies, contact us