The new Guernsey Trusts Law makes several amendments to the
Island's fiduciary environment, with not only the
introduction of Purpose Trusts but also the abolition of the
personal liability of directors in Private Trust Companies
(PTCs) as a way of encouraging greater use of such
entities.
These legislative developments are further to
Guernsey's 50-year experience in providing trust and
corporate services, which has cultivated a wealth of expertise
and first class infrastructure in the field. The Island plays
host to some 140 licensed fiduciaries, ranging from
international organisations to independent operations, holding
more than £200bn assets in trust. The industry's
highly skilled workforce is complemented by a network of
sophisticated legal, accounting, tax and actuarial advisers,
making the Island an ideal home for PTCs.
What is a PTC?
In essence it is a privately owned company that acts as
appointed trustee, usually for a family trust or group of
trusts; it is a trust company, albeit one that does not act
commercially for any third party trusts. PTCs are often, but by
no means exclusively, at the heart of a Family Office
established to run a family's affairs.
Traditionally, settlors have appointed professionals, family
members or friends to act as trustees of their settlements.
Though this has proved perfectly acceptable historically, the
increased burden and risk on trustees nowadays means that many
individuals are reluctant to accept the role.
Advantages of PTCs
The board of a PTC can subject to tax considerations often
be populated with the right complement of professionals,
specialists, family members and friends; it can be changed
quickly if necessary without compromising the continuity of the
underlying trusteeship or administration. A professional
trustee is often appointed to the board for many reasons, not
least to discharge the day-to-day administration of running the
PTC and its underlying trusts.
Under the new law, the personal risk is reduced for an
individual acting as a director of the PTC, rather than as a
personal trustee. This follows the abolition of section 70 of
the old law which effectively made the directors of trust
companies personal guarantors of the liabilities of the trust
company.
With the focus on just one family and often with the
involvement of members of the family, the PTC's greater
understanding of the family gives increased assurance to the
family that decisions will be made quickly and sensitively to
their interests particularly, for example, in relation to
interests held in family businesses etc.
Structures for PTCs
There is no standard approach or solution to the structure
of a PTC. They will differ according to the family's
particular needs. However, simple Guernsey companies are often
used, the shares of which will in future be able to be owned by
a Guernsey Purpose Trust.
The structures underlying the PTC should be designed to best
suit the various tax, legal and family considerations and
should be reviewed periodically as objectives and circumstances
change.
Appointing strong-minded professionals is essential to
ensure the integrity of the trust is not compromised through
improper administration or undue influence from the family.
Establishing the structure and ensuring the family's
individual and collective requirements and aspirations are
achieved can be a complex and time-consuming process. The
commitment and costs involved are naturally likely to be a
little more than those associated with a traditional trust
company but in the right circumstances the end may justify the
means.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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