Increasingly, families prefer to establish their own bespoke trust company to act as trustee of their trusts. Such choice is often appropriate where the family wealth is tied up in an intricate web of family owned business or comprises complex commercial investments, also including assets which are considered of higher risk or technically difficult to manage.


I. Family's objectives


A settlor interested in setting up a trust managed by a bespoke trust company usually seeks a combination of the following:

  1. maintaining the management of the assets in the hands of the family, while limiting the influence of external entities;
  2. a long-term control on the activity of the trustee, across generations;
  3. a trustee with specific technical knowledge in relationship with the assets held in trust;
  4. rapidity in commercial decisions regarding the administration of the assets held in trust;
  5. limitation on the leakage of information regarding the trust, the settlor’s family affairs and assets.


II. One family, one trust company


Settlors may choose between two options:

  1. Private Trust Companies (PTC); or
  2. Dedicated Trust Companies (DTC).


Both PTCs and DTCs are incorporated with the aim to act as the trustee of a specific trust or a number of related trusts, typically for the benefit of the settlor's family. As the names suggest, PTCs and DTCs do not offer trustee services to the general public.


III. A double level of customization


PTCs and DTCs give the settlor and his family the opportunity of relying on a complex structure that presents a double level of customization.

When structuring his wealth-planning project, the settlor will be called upon to express his own wishes related to the following:

  1. the provisions contained in the trust deed; and
  2. the rules governing the trust company.


For what concerns the first level, the settlor will decide how to structure the duties and powers of the trustee, the rules for the appointment of the beneficiaries, the advancements, the distributions,

the termination of the trust. The settlor will also decide whether the trustee will perform the trusteeship with the support of an advisory body of family’s trusted experts in place of, or together with, a protector, with the task of providing technical guidance in managing the trust fund.


For what concerns the second level, the settlor will express his preferences on the composition and functioning of the management of the trust company, with particular reference to the degree of involvement of family members and third parties.


Since the trust company is appointed as trustee of the trust, the vehicle’s board of directors will actually take all the decision on the trust administration.


IV. Private Trust Companies (PTC)


A PTC is a special purpose vehicle established directly or indirectly by members of a family to act as corporate trustee.

There are two primary ownership options:

  1. the PTC can be directly owned by the members of the family;
  2. the PTC can be owned by the trustee of a non-charitable purpose trust.


If the members of the family own the PTC, on the one hand, they achieve the maximum degree of influence on the structure, but, on the other hand, many risks could arise in terms of

creditor protection of the asset held in trust. By contrast, the establishment of a purpose trust allows ownership of the private trust company to be formally detached from the members of the settlor’s family, granting a higher level of protection to the trust's assets.


Furthermore, the purpose trust confers additional protection with respect to the PTC shares, as these shares don't belong to the settlor or any other person in the event of the settlor's death,

and shall not be available to a third party in the event of successful claims against the settlor or his successors.


The purpose trust must involve two additional persons: a trustee to own and manage the shares of the PTC and a protector to ensure that such trustee fulfils its obligations. The purpose trust is usually managed by a professional trustee. The settlor and his family members or trusted advisers could be appointed as protectors, hence increasing the control of the family on the structure.


V. Dedicated Trust Companies (DTC)


As well as for the PTC, the DTC’s purpose is to act as trustee of a specific trust or more than one trust for the benefit of the same family.

A DTC is an underlying company entirely held by a professional trust company. Therefore, the DTC’s ownership is formally independent from any member of the settlor’s family. Both the DTC's shares and the assets held in trust will be hence fully protected from any risk related to the personal positions of the settlor and the beneficiaries. In this way, the DTC combines the following advantages:

  1. a vehicle purely meant for the administration of a family trust;
  2. the efficiency granted by the involvement of a professional trust company;
  3. an effective segregation ensuring the highest-level of asset protection.


VI .Appointment of directors of the PTC / DTC


It is fundamental to decide on the identity of the directors of a DTC/PTC, since they will effectively make the decision of the trustee. It may be appropriate for the settlor and the members of the family to be appointed among the directors of the trust company, in order to enable them to control or participate in the decision making process. It can sometimes be better, from an asset protection and tax perspectives, for the family members to be a minority on the board. Therefore, trusted advisers of the family could also be appointed as directors in order to provide the board with a professional support. This would also alleviate concerns about passing control to unknown third parties. It might also be advisable to include in the board of directors experts in the administration of trusts. In case of DTC, they could be the same directors and officers of the professional trust company.


VII . Outsourcing of services to a professional trust company


If the board of PTC/DTC, properly integrated by members of the family, advisers and trust experts, could be perfectly suited to perform the trusteeship, many other services may need the external cooperation of administrative departments of a structured trust company. To this end, the PTC/DTC may establish an agreement with a professional trust company, in order to outsource management and administration services, such as the provision of authorized agents, principal office, recording keeping, accounting and other administrative services. Obviously, the establishment of a DTC allows a smoother relationship with the professional trust

company which is also the shareholder of the same DTC.


VIII . Confidentiality


Confidentiality can represent a fundamental aspect for many HNW families, especially in those countries where concerns over financial privacy are driven by issues of personal safety. The spread of information in relation to the settlor’s family affairs and its assets will be more limited through a vehicle that only deals with a specific trust or a number of trusts related to the same individuals. An additional tier of confidentiality could be imposed by holding shares of the PTC through a purpose trust or by a DTC, fully administered by trusted professionals and family advisers.


IX . Swiss trustees’ regulation on PTC and DTC


Trustees’ activity in Switzerland is regulated in accordance with the Financial Institutions Act (FinIa). This regulation subordinates the professional exercise of trustees’ activities to a license, issued by the Swiss financial Markets Supervisory Authority (FINMA). The FinIA provides an exemption for PTCs, which exclusively deal with a trusts whose beneficiaries have family ties with its shareholders. (article 2 (2) FinIA). Moreover, the Financial Institutions Ordinance (FinIO) foresees an exemption for those DTCs, which act exclusively as trustees for trusts, which were established by the same person or in favour of the same family and held by a professional trustee already licensed (article 9 (3) FinIO). Such kind of PTCs and DTCs falls outside the scope of the law and can be freely established, not being required to comply with the strict regulation of FinIA.