Private Trust Company Structure

Since PTCs were first created in the 1990s and early 2000s – they started at different points in time in different locations – interest in and use of PTCs has steadily increased in several jurisdictions.

These include Switzerland, the Cayman Islands, Singapore, the UK Crown Dependencies, and certain states within the US, currently, Alaska, Delaware, Nevada, New Hampshire, South Dakota, Tennessee, and Wyoming.  

Below are points to consider if you’re thinking about starting a PTC. 

Control and Flexibility

One of a PTC’s most significant features is the ability for a family to be hands-on in both the strategic direction and management of their assets. 

The PTC structure provides an UHNW patriarch or matriarch with the tools to help groom the family’s next generation of leaders. For example, an adult child can serve as a company board member and/or a board committee member. These opportunities can help to prepare them to be responsible stewards of intergenerational wealth once they hold the reins. 

The structure and flexibility of a PTC can help bring family members up to speed on the scope of their future responsibilities while at the same time helping them to become comfortable before they get to the point where they’ll be the ones making decisions.

At the same time, being involved in decision-making also comes with significant responsibility, such as making investment decisions, distributing assets, and communicating with family members. Responsibilities also include hiring and managing investment advisers, attorneys, accountants, and other trust professionals.  

While some family members may relish these responsibilities, others may find them to be challenging. It’s important to assess what your comfort level is. 

Streamlined Governance and Tax Efficiency  

A PTC structure can hold multiple family trusts and consolidate the administration and responsibilities under one single company. This simplifies asset management, reporting, and administration.  

Unlike a traditional trust, family members can come up with their own governance rules. 

A PTC can be set up to manage your family’s tax liabilities. This makes them useful for both tax and succession planning. 

A PTC can also provide potential tax efficiencies within certain jurisdictions, such as the Cayman Islands where currently there are no withholdings on transfer of assets and no income tax on any income generated by the assets of the trust. 

Privacy

In a PTC structure, the company is the legal owner of the underlying assets. This can help to protect a family’s privacy. PTCs are often established in offshore jurisdictions that have strict privacy laws, such as the Cayman Islands. 

Cost

A PTC costs more to establish and maintain given the PTC’s relative structural complexity (see graphic below) as compared with either a revocable or irrevocable trust.  

For example, there are ongoing fees to run the PTC, including salaries, insurance, regulatory filing fees, and other associated costs. There will also be fees due to trust service providers such as the professional trust company serving as the PTC’s trustee.

The start-up and ongoing expenses and the time and effort spent on managing the company should be considered when deciding whether a PTC structure is right for your family. However, a PTC offers control and flexibility.

The key point here is to understand what a family’s objectives are. We talk this through openly with our clients to understand their vision for their wealth, the level of control and flexibility they’re looking for, and how involved they want to be in managing their assets.

ZEDRA’s Swiss-Cayman Team

ZEDRA’s integrated Swiss-Cayman team of trust and wealth management professionals work together to advise UHNW families, including with the structuring and establishment of PTCs.

ZEDRA combines the strengths of two of the world’s most reputable financial centres – Switzerland and the Cayman Islands – to advise and support clients on wealth strategies, tax efficiency strategies, and operating their PTC with good governance.

Setting up a PTC is a way to build and protect lasting wealth, streamline multiple investments, manage wealth transfer, and ensure the security of your assets during periods of political or economic instability or even family conflicts.

As a professional trustee, ZEDRA handles the administration of PTCs and helps with their management if required.

How ZEDRA can help

A Swiss-Cayman private trust company enables a family to have a high degree of control and flexibility over their investments in a tax-efficient and private manner. It also provides patriarchs and matriarchs with the opportunity to groom the next generation of family leaders.

For more information on how ZEDRA can help you structure a Swiss-Cayman Private Trust Company, contact Eduardo D’Angelo P Silva or Vadim Neumann.