Head of Geneva Office
Families sometimes express concern that although they recognise the value of a discretionary trust at the heart of their succession planning arrangements, they worry about the loss of control associated with appointing independent trustees.
This is particularly so where family businesses are becoming assets of the family trust, the fear being that the speed of reaction, flexibility and entrepreneurial touch that made the business a success may be diluted when ultimate decision making rests with independent trustees remote from day to day business considerations.
This is a valid concern as, however well meaning, professional trustees located in financial centres far removed from the businesses’ undertakings cannot replace the breadth of experience that resides within a family board. The solution is to ensure that experience is fully represented in the trustee and this can be achieved by creating a Private Trust Company (PTC) to act as trustee of the family trust.
It is important to draw a distinction between the PTC and the trust. The PTC is not the trust; it is a company incorporated for the sole purpose of acting as trustee of one or more associated family trusts. In many international financial centres legislation provides for a company to be incorporated for this purpose, allowing the board of the PTC to be composed of family members, trusted advisers and usually a licenced trust and corporate services provider such as Minerva.
By having a majority on the PTC board, or at least family representation, any concerns the family has around potential loss of control are addressed, ensuring the family’s businesses and other arrangements are well understood at trustee level.
A seat on the board of the PTC is also a very effective way in which to gradually involve the next generation in matters of family governance.
The PTC has little or no intrinsic value itself as its sole purpose is to act as a trustee. There are various options as to how the PTC might be owned including: directly by the Settlor of the family trust(s) or by a purpose trust or foundation, the sole purpose of either of which is to own the shares of the PTC.
Minerva can provide some or all of the following services to PTCs:
Minerva provides Private Trust Company Services through its offices in Jersey, Mauritius, Geneva, Dubai, Kenya and London.
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