Structuring Private Family Trust Companies and SPEs for High Net Worth Individuals and Families

Evaluating Benefits and Risks, Ownership Structures, and State Law Considerations

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Tuesday, August 2, 2022

Recorded event now available

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Course Materials

This CLE course will provide estate planning counsel and advisers with a practical guide to structuring private family trust companies (PFTCs) and special purpose entities (SPEs) for high net worth individuals and families. The panel will discuss the benefits and risks of PFTCs and other separate entities, describe ownership structures, and detail state law considerations in setting up PFTCs and other incorporated vehicles for holding family wealth.

Description

A powerful estate planning tool for ultra-wealthy families, the PFTC is a separate entity, frequently state-chartered, designed to provide fiduciary services to family members. Generally structured as limited liability companies or corporations, PFTCs are authorized under state law to serve as fiduciary for families that qualify under the SEC definition of family and the family office exemption.

Several states have well developed legal structures to accommodate PFTCs. These states have relatively similar definitions of family members eligible to be served by the PFTC and the extent of services and transactions a PFTC may provide. These companies can operate in conjunction with, or in place of, family offices and provide privacy, asset protection planning, flexibility, succession stability for families with significant wealth, and liability protection for trustees.

PFTCs share significant similarities with SPEs and trust protector corporations (TPCs) structured to work with directed trusts. These entities often provide an attractive alternative to individual or corporate fiduciaries. Estate planners should know how to structure and use these stand alone entities to serve high net worth clients.

Listen as our experienced panel discusses the benefits and risks of PFTCs and other separate entities, ownership structures, and state law considerations in setting up PFTCs and other incorporated vehicles for holding family wealth.

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Outline

  1. Characteristics of PFTCs
    1. State-chartered entity
    2. Authorized to serve as a fiduciary
    3. Exempt from SEC registration requirements
    4. Limited to serving one family
  2. PFTC formation considerations
    1. Capital requirements
    2. Public disclosures
    3. Domicile or physical presence
  3. States with PFTC statutes
  4. Transitioning from family office structure to PFTC
  5. SPEs/TPCs as alternatives to PFTC structures

Benefits

The panel will review these and other key issues:

  • Capital requirements and state regulatory burdens to consider in forming a PFTC
  • Traditional family office vs. PFTC structure
  • How PFTCs allow for family members to have greater involvement in structuring investment management policies and decisions than is permissible with an individual or corporate trustee
  • Operational and corporate governance issues to be addressed before establishment of a PFTC
  • Ongoing compliance issues to be addressed after establishment of a PFTC

Faculty

Aiello, Vincent
Vincent Aiello
Of Counsel
Spencer Fane

Mr. Aiello helps business owners solve legal problems to secure revenue flow and reduce business risks. As a lawyer and...  |  Read More

O'Neil, Serena
Serena O'Neil
Attorney
Spencer Fane

Ms. O’Neil helps clients plan for the future by developing estate plans tailored to meet their goals for...  |  Read More

Decker, Joshua
Joshua A. Decker
Of Counsel
Spencer Fane

Mr. Decker is Of Counsel with the firm and focuses his practice on estate planning, tax planning, and trust and estate...  |  Read More

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