Private Family Trust: The Business & Technical Aspects
Considering the Legal, Business & Technical Aspects
There are several important legal issues to consider in planning for a private family trust company. A private family trust company is by legal definition a trust company for a single family. It is a legal entity, created under the laws of the state or jurisdiction, either in the US or overseas, that will govern the trust company. This will also be the state or jurisdiction in which the family trust company will conduct business. Another issue is choosing a jurisdiction that by state law recognizes private family trust companies as distinct and separate from public trust companies. Why is this important? The company may be subject to the same regulatory oversight and requirements as a public trust company. In summary, these are just a few of the issues to be considered.
How A Private Family Trust Company Differs From a Family Office
Trusts are a dotted line from the affairs of a family office to assure independence of decisions, privacy of terms of trusts and the interests of the beneficiaries. A private family trust company has a central focus around trusteeship and trust administration. A family office is not geared toward substantial amount of details around trust work, the long-term nature of the practices, nor the needs for privacy and protection of beneficiary interests. Most importantly a family office cannot serve as a trustee. When multiple trusts with different purposes are created and their terms may span decades or even life times of family members, a family office often woefully under supports trustee management and trust administration. Similarly the family office activities and focus may be in conflicted with the terms of trust and trustee purposes. These all lead to the potential for ‘what can go awry, often does’. When significant undesirable consequences occur these are far more costly than working with a quality public trust company in a trust jurisdiction or state via a private family trust company.
Business & Technical Topics Covered
- Planning For a Private Family Trust Company
- Specific Talents Required
- Functional and Operational Components