Private Offshore Trust Company Benefits and Features

If you’ve never heard of a private offshore trust company – or PTC for short - don’t worry!  These entities were lesser known and used until recently, but they are becoming more flexible, more likely to be accepted by most jurisdictions and therefore better known and more widely used, which is why we have decided to feature private offshore trust company benefits and features so that more people can get to grips with the intricacies of these highly useful entities.

If you’re familiar with the concept of an offshore trust but always had issue with handing over control of your assets to a third party you are not alone.  Many people fear that the establishment of a trust really leaves them in too tenuous a position regarding the protection and management of their own assets…which is why private offshore trust companies came into being.  They give the settlor far greater asset control.

As a settlor, if you place your assets into trust you can establish and benefit from a PTC in the majority of decent offshore jurisdictions nowadays.  A PTC effectively takes on the role traditionally taken by a trustee, and it manages the assets within the trust for the benefit of the beneficiaries.  And a settlor can be a director of the private trust company thus ensuring they maintain a certain amount of hands on control over the assets included in the trust.  However, it is worth mentioning that there can be some tax disadvantages if the settlor is a director – better is often to have a trusted family member on the board instead for example.  To determine the best path in your particular circumstances, you must seek professional advice.  Note, this article does not constitute professional advice.

In terms of the features and benefits of a private offshore trust company they include the following: -

1) Family members can be directors within the PTC and therefore make decisions relating to the management and control of assets within the trust which can include a family business for example.

2) A PTC is far more effective than a ‘letter of wishes’ which is really the only control a settlor has over a traditional trust managed by third party trustees.

3) If a business is placed in trust, the directors of the business can make up the board of directors of the PTC ensuring the direction of the business is managed effectively – and if a change of direction is required for the business or the trust, the board of directors can be changed.

4) It is usually advisable to employ the services of a professional trustee on the board of PTC directors to ensure the trust remains as tax efficient as possible and meets all legal requirements.

5) The majority of directors should be offshore for tax efficiency to be maintained.

6) If the settlor is on the board of directors this can have an adverse effect on tax efficiency – advice should be taken.

7) It is usually sensible to set up the PTC as a limited company – limited by guarantee.  This is so that it is easier to add and remove directors and their control at a certain time in life, upon death or as required by the beneficiaries of the trust and/or the settlor.

8) For a PTC to be recognised and accepted, most jurisdictions only allow the private offshore trust company to act as trustee specifically for a single or group of trusts belonging to one family for example – it cannot be a company that offers its services as a trustee to external settlors.

9) The cost of overall establishment of an offshore trust AND a private offshore trust company can be higher at inception – but ongoing, costs are likely to be significantly lower than if you choose the traditional path and have a third party company or individual acting as trustee.  This is because trustees often charge fees based on the overall asset value of the trust.

10) Remember to take professional advice every step of the way to ensure legal requirements are met and tax efficiency is achieved and maintained.

Further Offshore Trusts Articles

Share this article with others.