Private Family Trust Companies:
A Private Family Trust Company (PFTC) is typically a family owned South Dakota LLC which is authorized by the South Dakota Division of Banking to be a PFTC and serve as the trustee for the family trusts. These trusts may be both South Dakota law trusts as well as non-South Dakota law trusts. The governance of the PFTC is generally structured like a corporation (i.e., board of managers/directors) working with both distribution committees responsible for trust distributions and investment committees responsible for trust investments. All of these committees are generally appointed by the PFTC board and generally are made up of family members and their trusted advisors. A minimum of three board members must be chosen and only one board member must be from South Dakota. Typically, SDTC serves as the South Dakota board member.
Some of the main advantages of a South Dakota PFTC are:
Liability protection to family members by acquiring Directors and Officers and Errors and Omission insurance. This protection cannot be obtained, if they are named individually as trustee. All of the powers of an SEC Registered Investment Advisor (RIA) without the SEC. The PFTC's are generally exempt under the Securities Act. Governance and succession advantages A PFTC generally presents a strong case for fully deducting the investment management fees associated with the trust as a part of the trustee fee. These Investment Management fees are generally subject to 2% AGI floor, if individual family trustees are utilized instead of a PFTC.
The typical modern South Dakota Private Family Trust Company structure promoting flexibility and control is outlined below:
For additional information on please contact us or visit SDTC's private family trust company website, www.privatefamilytrustcompany.com. |