This chapter is dedicated to Sara Hamilton, the founder of the Family Office Exchange, a great friend, a pioneer, and my closest companion on the path to learning how to help families preserve their wealth.
I debated whether to include this chapter in the book since it deals with a subject of limited application. The costs of chartering and operating a private trust company make it prohibitively expensive for families with less than $60 million. However, private trust companies have proven to be such a powerful tool in long-term family governance for the families who have created them that I decided the book would be incomplete without a discussion of the idea. For the vast majority of readers whose families will not charter a private trust company, this chapter offers a reprise of many of the ideas on family governance set out in other parts of the book.
The term private trust company (PTC) was coined to describe a corporation that is formed to provide fiduciary services to a single family, as opposed to a corporation that offers its service to everyone. Many state laws refer to such an entity as a limited-purpose trust company. In the balance of this chapter, I will use the term PTC to cover both a trust company that voluntarily limits its services to one family and a limited-purpose trust company.
In order for a PTC to accept fiduciary assignments, it must obtain a charter from one of the fifty-one state banking commissions or from the Office ...