Family Trust Companies help families preserve their wealth.
If you live in Nevada, you may have heard about these trusts.
Nevada has allowed a "company" to serve as a trustee for a family trust since 2009.
How is this different than a retail trust company?
According to a recent The Wealth Advisor article titled “Family Trust Companies In Nevada,” a retail trust company can provide its services to the general public.
The family trust company (FTC) cannot.
A FTC is created for the purpose of serving a single family.
Why would this be helpful?
Institutional trustees and FTCs can both manage real estate, private-equity interests, and hedge funds.
There are some assets a FTC may be better suited to manage.
Let us say you have a controlling interest in a business.
If you put this in a trust, the trustee then has control of the business.
This means they could be liable for business activity.
If you have a regulated business, you will likely not find an institutional trustee who would accept the role of trustee for your trust.
This institution would subject itself to regulatory oversight because of the type of business held in the trust.
If they do accept such a trust, you should expect higher fees for their troubles.
When you set up a FTC, you select the offers and directors.
This means you can make specific choices of experts or family to manage the assets.
If you were to work with an institutional trustee, you would not have this luxury.
Also, an institutional trust company, by its very nature, will serve as trustee with its own profitability in mind.
The role and goal of a FTC is the "family" rather than such profitability.
When deciding ownership of the trust, there are options.
Some families form their FTCs as a limited liability companies (LLCs) with one or more family members as the managing members.
Others may choose to have the managing members be a trusts.
Transferring Options and Privacy.
There may be several family transactions your FTC would need to make.
Sometimes an institutional trustee may be unable to make them.
For example, if you need fiduciary statements, inventories, lists of accounts, or other documents sealed from the public, your FTC could request such actions from a court.
Educate your family.
If you want your family business to last for generations, the FTC could help.
It will help protect the wealth of your business while training new generations to work for the benefit of the family.
That certainly sounds like a win-win, yes?
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: The Wealth Advisor (December 18, 2017) “Family Trust Companies In Nevada”