PRIVATE TRUST COMPANY BENEFITS
There are frequent cost concerns regarding Independent Trustees, e.g. a corporate fiduciariy or banking institution. You may also be concerned over who controls the Trust and its assets. If this describes your situation, then you should establish a Wyoming Private Trust Company (“PTC”) to act as Trustee.
Private trust companies can be effectively integrated with broader asset protection goals. They are often set up as a limited liability company (LL to protect family members serving on an investment committee from liability for their decisions. Wyoming was the first state to allow for the creation an LLC and remains at the forefront of LLC innovations.
Formation: A PTC is a generally an LLC formed in Wyoming to serve as Trustee of a single Trust or a family of Trusts. Your PTC may not serve as as public trustee, and is may only be Trustee for one family.
Owner(s): The PTC’s owner will be you or family, who will also serve as managers should the PTC be an LLC and officer if a corporation.
Committee: The PTC typically designate committees to operate certain aspects of the the served Trust(s) and PTC, including a Distribution Committee, Trust Administration Committee and a Investment Committee. Advisors and family members serve on these committees.
Operating Agreement or Bylaws: Operating Agreement govern PTC operations if the company is an LLC and Bylaws if a Corporation. You should ensure the governing documents are drafted so the PTC avoids estate tax problems. . The Internal Revenue Service has issued an IRS Notice and Private Letter Rulings providing non-controlling guidance vis-a-vis PTC structuring.
Wyoming Benefits: Wyoming is the best state to establish a PTC because of our focus on ease of administration and formation. No required capital contributions combined with avoiding oversight by the State Division of Banking help us lead the nation. Other states have minimum contribution requirements of from $200,000 to $500,000 on formation and requiring compliance with operating regulations. Wyoming is thus extremely attractive.
Wyoming Situs Benefits
Wyoming recently amended its laws to clarify that a charging order is the sole remedy for creditors pursuing LLC assets, regardless of whether there’s only one member. Creditors are not allowed lien or foreclosure rights pursuing Wyoming Limited Liability Companies. Unlike other states, a creditor may only satisfy judgements via an LLC obtaining the right to distributions.
This remedy is unattractive since an LLC is under no obligation to make distributions, delaying (indefinitely) any settlement. Further, Wyoming’s does not allow foreclosing LLC interests reducing the risk an LLC’s veil may be pierced. This further reduces the risk that claims against private trust company may be settled using the personal assets of a membebr. PTCss may be used in conjunction with other tools to enhance asset protection.
Spendthrift trusts prevent creditors from pursuing assets inside the trust. In desirable jurisdictions, e.g. Wyoming, protection extends to self- settled trusts. Regardless of whether your trust a spendthrift clause, Wyoming allows discretionary distributions and protects them until a distribution is actually made. Wyoming law is clearr in this respect and creditors may not attach such distributions.