Family Wealth: — Keeping It in the Family — How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations, Revised and Expanded Edition

Chapter 15. The Private Trust Company

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 ...