A private trust company ("PTC") is a privately owned incorporated Jersey or non-Jersey company that operates as a trust company. It does not, however, offer public trustee services but instead acts as the appointed trustee of a specific trust or a related group of trusts - usually for a particular family, for specific philanthropic objectives or for a common settlor.
Jersey law requires any person who carries on trust company business in or from within the Island, or any Jersey registered company that carries on that business anywhere in the world, to apply to the Jersey Financial Services Commission ("JFSC") to be registered to do so, unless such person is able to rely upon one of the available exemptions.
Provided an intended PTC meets all the following criteria it may rely upon an exemption and will not be required to apply to the JFSC for trust company business registration:
- it's purpose is solely to provide trust company business services in respect of a specific trust or trusts;
- it does not solicit from or provide trust company business services to the public;
- it' s administration is carried out by a registered person registered (e.g. Vistra) to carry out trust company business.
The exemption is limited since certain statutory provisions will continue to apply to the PTC and as a result the PTC continues to be subject to the overall regulation of the JFSC.
When establishing a PTC, the only formality that needs to be followed is to notify its name to the JFSC. Reliance upon the exemption does not require any additional consent or enquiry and a PTC can be established on a 24-hour fast-track basis in Jersey. Furthermore, there is no requirement to file accounts or any other information, thus making it a discreet, private structure.
When establishing a PTC structure, particular thought must be given to the ownership arrangement, administration and board composition of the PTC. Whilst the ownership of a PTC is flexible, it is likely that it will be primarily influenced by tax considerations. Other factors, such as confidentiality issues, personal circumstances, family disputes or succession planning may also require consideration.
Since direct personal ownership of a PTC is often not feasible, private foundations or purpose trusts (either charitable or non-charitable) are frequently preferred alternative ownership vehicles.
As already noted, a PTC must be administered by a Jersey registered trust company. 'Administration' is not defined by the legislation and the PTC board can be tailored to suit the requirements of the particular structure. As with ownership arrangements, when considering the composition of the PTC board, careful deliberation must also be made of factors which may affect the efficiency of the PTC governance. These may include director disclosure obligations, conflicts of interest, fiscal and continuity and succession planning issues.
The possible uses of PTCs are considerable, making them a highly flexible and appealing alternative for high net worth families to the more traditional trust structures. PTCs may simultaneously have both commercial and charitable objectives which gives added advantages.
A PTC can be utilised to consolidate the administration of multiple trusts, each for distinct purposes, thereby conveniently managing and preserving family wealth over generations and planning effectively for the future ownership of family business interests. A PTC will ensure greater family control over the family trusts and, often most importantly, the management of the trusts' underlying investments. In addition, PTCs can provide an ideal framework in which to introduce younger family members into the family business and to the disciplines of wealth administration. By controlling all or part of the management of the family trusts, ongoing trustee fees can also be managed to some extent and confidentiality improved. Furthermore, the trustee's decision making process will generally be more rapid than in a traditional trust arrangement.
In summary therefore, PTCs offer high net worth families an attractive planning alternative to traditional trust structures for both their private wealth management needs and philanthropic objectives.
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.