Public Trust Companies charge ~1% of assets under management.
There is no need for an independent trustee.
No need to share information with third parties.
A Private Trust Company is unregulated and may be the trustee for a family of trusts. They are surprisingly simple to set up and are flexible enough to meet most family situations. They have historically been used to: maximize control, flexibility, privacy and to administer their trusts in friendly jurisdictions.
Numerous states have enacted statutes which ease the creation of unregulated private trust companies. These change have made possible the establishing of such companies by families of more modest means. In particular, Wyoming provides particular advantages for investment advisors when comparing jurisdictions.
These benefits include zero state taxes on trust assets, private trust companies, zero regulation of investment advisors, and settlor-friendly trust laws. Learn more about private trust company benefits here.
Owner(s): You and your family generally own the entity. Family members and advisors fill officer, committee and other positions.
Committees: Though not required, committees are used for administration and operations. These may include a Trust Administration, Distribution or an Investment Committee.
Service Providers: The PTC may form agreements with family offices, advisors, trust companies, legal advisors and accountants regarding PTC administration.
Requirements: Wyoming's requirements are surprisingly simple. The company is formed similarly to a traditional LLC or Corporation.
Articles of Organization: These contain clauses preventing the PTC from providing services to the public. The PTC may act as Trustee for a related family of trusts.
The filing process is fast and then the PTC is recognized in the same manner as other business entities. There are no additional processing fees, filing fees, or capital requirements. Once the PTC is formed, it can begin acting as Trustee for the family when needed.
Governing Documents: The PTC’s Bylaws or Operating Agreement govern the company. One should ensure the documents are wrritten to avoid estate tax inclusion. The PTC may form service agreements for administration of said trusts.
A PTC is an entity, generally an LLC, that assists your family manage business interests and assets. The company is generally owned by family, acts as the family's trustee when needed.
The advantages of such an arrangement are privacy, separating family companies from investment management, centralizing investment, tax and estate planning, and the ability to provide financial tutoring to younger family.
PTCs are formed in part for their flexibility. The company may act as a permanent trustee and is structured according to your family's needs. This includes managing investments, trust administration and other related activities. The flex also helps lower costs. Contrast this with public trust companies which often impose a one size fits all method.
Wyoming is one of the best jurisdictions to form a PTC, due to the ease of formation and administration, few regulatory requirements, no capital requirements, no state income taxes and low filing fees. Also, due to the favorable trust legislation and potential income tax benefits associated with establishing a Trust in the State of Wyoming, the appointment of a Wyoming Private Trust Company can help to establish a sufficient connection with the state of Wyoming, bringing the Trust under the jurisdiction of the state of Wyoming and its favorable tax and trust laws.
Private trust companies can be effectively integrated with broader asset protection goals. Establishing a private trust company as a limited liability company (LLC) can protect family members serving on an investment committee from personal liability for their decisions. Wyoming was the first state to allow for the creation of an LLC and remains at the forefront of LLC innovations.
A Wyoming Private Trust Company can assist with satisfying requirements that the Trustee be “a corporate trustee” and/or domiciled in Wyoming. A Wyoming Private Trust Company can be utilized for a variety of estate planning purposes, from clients desiring a low cost Professional Trustee, to clients and attorneys desiring to implement sophisticated estate plans for high net worth families. Many clients may see the benefits of a PTC as Trustee of their trusts.
The Wyoming legislature recently amended its statute to clarify that the charging order provides the sole creditor remedy against LLC assets, even if the LLC has only a single member. Creditors have no foreclosure or lien rights against Wyoming LLCs. Unlike in many other states, a creditor can only satisfy a judgement out of a member’s interest in an LLC by obtaining that member’s right to economic distributions.
Creditors often find this remedy unattractive because the LLC is never required to make such distributions, easing the settlement process. Finally, Wyoming’s statute prevents foreclosure on LLC interests and reduces the risk that a creditor may “pierce the veil” of an LLC and satisfy claims against the private trust company out of a family member’s personal assets. Private trust companies can be combined with other asset protection tools developed by modern trust law jurisdictions.
Spendthrift trusts can prevent creditors from satisfying judgments out of assets that remain in trust. In top trust situs jurisdictions like Wyoming, such protection is available even for self- settled trusts, subject to standard fraudulent transfer limitations. Further, states like Wyoming protect discretionary distribution interests until they have been distributed, regardless of whether a trust has a spendthrift clause. Wyoming provides a clear definition of ‘discretionary’ and prevents creditors from attaching such trust distributions.