Private Trust Companies For Clients In The Middle East

The question of who should act as trustee of a trust is fundamental to any wealth planning structure. For wealthy families and entrepreneurs in the Middle East, the choice is often between appointing a professional trustee or establishing a Private Trust Company (PTC), a bespoke entity incorporated solely to act as trustee of one or more family trusts.

A PTC allows families to retain a greater degree of control and involvement in their wealth structures while preserving the legal validity of the trust. For many Gulf families, where family governance, continuity, and confidentiality are essential, a PTC provides the ideal balance between independence and control.

What is a PTC?

A PTC is a company incorporated with the sole purpose of acting as trustee for a specific trust or a related group of family trusts. Unlike professional trustees, a PTC does not provide services to the public and is therefore exempt from the licensing requirements applicable to commercial trust companies, provided it complies with Cayman regulations.

Many high net worth individuals and families use a PTC when looking to structure their family wealth. Where the person establishing a trust (generally referred to as the "settlor") is reluctant to relinquish control over the assets transferred to a trust, a PTC may be a suitable option for settlors and family members to retain a certain degree of control and involvement without prejudicing the legal validity of the overall trust structure. The board of directors of the PTC can include family members and their trusted advisors, as well as any local professionals thereby allowing a greater degree of control and familiarity with the decision-makers of the trustee.

Why Middle Eastern Families Use PTCs

Family Governance and Control

Many families in the region are reluctant to relinquish control over assets when transferring them to a trust. A PTC allows families to maintain direct influence by appointing family members and trusted advisors as directors. This ensures alignment with family values while preserving the integrity of the trust.

Education and Involvement of Next Generations

A PTC board can serve as a family governance forum, where younger generations learn how wealth and businesses are managed. This supports smooth succession and equips beneficiaries with the skills and understanding needed to preserve the family legacy.

Privacy and Stability

For high-profile Gulf families, privacy is paramount. A PTC avoids reliance on external trustees who may change staff or policies, ensuring confidentiality and continuity.

Efficiency

PTCs often prove more cost-effective than institutional trustees, particularly for families managing multiple trusts or complex assets across jurisdictions.

Structuring a PTC

The simplest structure is for the settlor or family members to hold the PTC's shares directly. However, this is often not desirable as it may give rise to tax or probate issues noting that the shares fall within the individual shareholder's estate which may lead to disruptions or an undesirable outcome in the event of the shareholder's passing.

Therefore, it is common for a purpose trust to hold the PTC shares. The purpose trust is established for objects only (i.e. it does not have any named or individual beneficiaries), its purpose broadly being to hold the shares and facilitate the management of the PTC. This means that the "parent" of the PTC is a licensed trust company (such as the Conyers Group of Trustees) which holds the shares of the PTC in its capacity as trustee for the corresponding purpose trust. The trustee's role is relatively passive such that the management and administration of the PTC is left to its board of directors, which would ordinarily comprise the persons nominated by the settlor and their family.

Another option available in the Cayman Islands that allows for more simplified structuring is for a Foundation Company to act as the PTC. A Foundation Company operates like a hybrid between a company and a trust meaning that while it has many of the same features as an ordinary company, including separate legal personality, it can cease to have any members or owners and can therefore exist solely for objects. This is an attractive feature for PTCs which are not necessarily designed with 'ownership' at the forefront (as a PTC will not usually generate profit on its own account as it is acting on a gratuitous basis). The settlor or family group is still able to exercise control over the PTC and the composition of its board, but will not have an ownership interest. This may overcome any tax or probate issues without the need for an additional purpose trust to hold the shares of the PTC.

Of particular relevance for Middle Eastern Families:

• Cross-border Assets: Many regional families hold significant investments outside their home jurisdictions. A Cayman PTC provides a neutral, globally recognised platform to manage these assets.
• Succession Planning: The ability to integrate family members on the board helps align traditional inheritance preferences with international trust law.
• Sharia Law Considerations: Cayman's "firewall" legislation protects trusts and PTC structures from forced heirship claims, making them particularly useful for families balancing local inheritance regimes with global wealth planning.

Why Cayman?

• Tax Neutrality: No income, corporate, or capital gains taxes.
• Global Recognition: Widely respected and accepted by international financial institutions.
• Legal Strength: Robust legislation and a sophisticated judiciary.
• Flexibility: Ability to structure PTCs directly or through Foundation Companies.
• Asset Protection: Cayman's laws safeguard against foreign judgments and forced heirship claims.

How Conyers Supports Middle Eastern Clients

Conyers' Cayman Islands team has extensive experience establishing Private Trust Companies for high-net-worth families and family offices in the Middle East. We advise on structuring, governance, and compliance, ensuring that PTCs are tailored to family needs while meeting international standards.

Through Conyers Client Services, we also provide corporate and fiduciary administration, delivering a seamless, end-to-end solution for families who wish to establish and operate a PTC alongside their trusts and related structures.

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.