A private trust company (PTC) is a bespoke wealth planning vehicle that provides a settlor and their family with greater control over the administration and governance of a trust.
The flexibility and autonomy offered by a PTC makes it an attractive option for high-net-worth individuals (HNWIs) seeking to preserve and manage family wealth while retaining influence over how assets are administered.
A PTC serves as a trustee for a family trust and the management of a PTC is entrusted to a board of directors. By carefully structuring its composition, families can retain a significant degree of control while benefiting from professional oversight.
Key advantages of a PTC in wealth planning include:
- Control: Unlike a professional trustee, a PTC allows the settlor and their family to participate in decision-making processes.
- Continuity: Family members and professional advisers can sit on the board, ensuring the trust continues to be managed in accordance with the original vision.
- Tailored investment strategies: A PTC enables bespoke investment strategies that align with the family’s risk tolerance and financial goals.
- Succession planning: A PTC provides a structured way to introduced younger family members to wealth management in a controlled and structured manner.
A PTC board usually comprises of a combination of family members, trusted advisers, legal professionals, and financial experts, a composition that balances professional management and family control.
The presence of family members on the board allows them to influence strategic decisions, ensuring the trust’s administration aligns with their long-term interests. The inclusion of independent directors and professional advisers enhances compliance with legal and regulatory requirements, mitigates risks, and strengthens governance standards. This structure enables the settlor and their heirs to actively engage in wealth management while preserving the legal integrity of the trust.
Abacus is recognised for its market-leading services in the establishment and management of trusts. Our client services team has outlined several long-term benefits of establishing a PTC, particularly in the context of preserving family wealth. These include:
- Asset protection: A PTC provides a structured framework to protect assets from external threats such as litigation, political instability, economic fluctuations and geographical risks.
- Succession planning: It facilitates the seamless transition of wealth from one generation to the next.
- Family governance: It fosters a culture of responsible stewardship by involving family members in decision-making, promoting financial literacy and shared accountability.
In an evolving regulatory landscape, there has been an increase in the number of PTCs being established. Several factors have contributed to this trend:
- Increased regulatory complexity: HNWIs are seeking structures that provide greater control while ensuring compliance with international regulations.
- Wealth expansion in emerging markets: Families from emerging economies, particularly in Asia and the Middle East, are using PTCs to safeguard wealth as they expand their financial footprint globally.
- Desire for customisation: The ability to tailor governance structures to suit family dynamics has made PTCs an attractive option beyond conventional trust arrangements.
- Economic uncertainty: In an era of geopolitical and economic instability, PTCs offer a robust means of wealth preservation and asset protection.
- Peace of mind: The unique blend of control and oversight provides clients with greater levels of comfort.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect on any particular issue.
