The Private Trust Company (PTC) is a Jersey company established for the sole purpose of acting as trustee for a family trust, or group of trusts and its value will normally be limited to the minimal amount of paid-up capital. The PTC will usually be the sole trustee and as such will act in accordance with the terms of the trust deed and relevant trust law to manage the assets of the trust or related trusts for which it has responsibility. The board of directors of the PTC , who will act in accordance with their fiduciary responsibility, will therefore take decisions in relation to the management of the trust property, or the distribution of income or capital to beneficiaries.
The PTC would usually be excluded from the beneficial class of the trust and, while it may be owned directly by a family member, more usually the shares of the PTC would be owned by a charitable or a ‘special purpose’ trust that has been established solely to own the shares in the PTC for the benefit of the settlor and/or his family.
The Board of Directors of the PTC may include family members who can ensure that the wishes of the settlor are given proper consideration and enable them to become familiar with and participate in decisions affecting the family assets. These assets may include the family business interests and the PTC can be used to provide the next generation with training and instruction for their future role in the business. In circumstances where it is impractical or undesirable for family members to be in direct control of the PTC, trusted advisors of the settlor are appointed to the Board. A member of the management team of the Jersey regulated company providing the administration services would also be a Director of the PTC in most cases.
The Board of the PTC can effectively take the place of a Protector Committee, often utilised in family trusts. It can therefore be seen that the settlor or his immediate family can retain a variable degree of control over the way in which the trust assets are managed. Management and control issues or fiscal matters may influence the exact make-up of the Board of the PTC and appropriate advice is essential to ensure that there are no adverse consequences for either the settlor or for the PTC itself.
Continuity is another extremely important benefit of a PTC. No matter how efficient a professional Corporate Trustee Company may be, it is a fact that staff change, managers are moved or promoted and it is perhaps unlikely that a settlor will have the same person responsible for his or her affairs over the longer term. This is one of the most frequent criticisms of corporate trustees, particularly the banks and large financial institutions, and is a perennial problem for which there is no obvious solution. The use of a PTC overcomes this difficulty and ensures management continuity over the longer term. There are no delays or misunderstandings as a result of new personnel ‘learning’ the file and, most importantly, there is no possibility of the PTC being taken over by a predatory third party.
A frequently overlooked benefit of a PTC, but one that can be of immense importance, is the ability of the PTC to react quickly to changing circumstances. This is particularly relevant where the family trust owns the shares of an active trading company. Decisions often need to be taken quickly and the board of a PTC will often be more familiar with the transactions of the underlying company than a corporate trustee and will be more capable of reacting quickly to changing circumstances.
Just to add to the advantages of the PTC it is worth considering the relative ease with which the registered service provider can be changed. With a PTC it will not be necessary to change the trustee or to transfer the title of trust assets and the requirement for legal deeds, indemnities and other documentation is therefore avoided. Where the underlying client wishes to change the administrator of their PTC for any reason, all that will be required is the resignation and appointment of new directors and notification of the new registered person responsible for the administration of the PTC to the JFSC.
Establishing a PTC in Jersey is clearly of great benefit to many wealthy individuals or families and provides a substantial degree of comfort that the family assets will be managed in the manner desired by the settlor and that an element of family influence can be retained. All this can be achieved with the minimum of bureaucratic intervention and without the need for registration or the payment of a licence fee.