A private trust company (“PTC”)is a company formed solely for the purpose of acting as a trustee of  a discretionary trust, or several related family trusts. PTCs provide a means by which the client, or  their family, can retain a greater degree of control over the trust affairs by composing the board of  directors of the PTC as they wish (typically a mix of family members and trusted advisors – dependent on the tax residence of these individuals).  

The PTC is controlled by its board of directors and, although the majority of the directors should be  resident in the Isle of Man in order to maintain management and control here, the client, other  family members or advisers may also be appointed to the board. Depending on the circumstances  of the client, the PTC can be owned either by a family member or by a Purpose Trust, its sole purpose  being to hold these shares.  

An alternative to the appointment of a family member to the board would be to appoint them as a  protector to the discretionary trust. There is no requirement for a protector to be appointed to an  Isle of Man discretionary trust however this does give the family another element of control whilst  maintaining confidentiality. When appointed, the protector is an independent third party, usually a  trusted advisor or family member (not a beneficiary, director of the PTC or the settlor) whose  powers are outlined in the trust deed. These can be tailored to the family’s needs however these can  include, 

• The power to remove the trustee. 
• The power to approve the addition or removal of beneficiaries.  
• The power to consent/veto distributions to beneficiaries. 
• The power to terminate the trust.

Although certain powers can be reserved by the settlor of a trust, this brings with it a certain level  of risk and we would recommend that these powers are minimised to maintain the integrity of the  trust. 

The structure as a whole can be created to take into account the wishes of the client and any legal  and tax advice received. This results in the client maintaining a higher level of control compared to  a standard trust arrangement. As a licensed company and trust administrator, Eximia would  administer the PTC and Trust and act as Trustee of the Purpose Trust. 

Advantages of a PTC

Control  – Some clients may be reluctant to  transfer complete control of their  family’s assets, wealth and business interests to offshore  trustees therefore a PTC allows the client to retain a certain level of control that they may be more  comfortable with.  

Confidentiality  – There is currently no centralised trust register in the Isle of Man and therefore this provides a level of confidentiality for clients not available in other jurisdictions.

Flexibility  – The structure can be used to hold  any of the asset classes normally  held in a typical discretionary trust  structure including luxury assets,  property, business interests, stocks  and shares and intellectual  property.  

Forced heirship – For clients whose country of origin  impose restrictions on the gifting of  assets during life and on death, the use of an Isle of Man trust may provide flexibility in how their wealth can be distributed.

Succession planning – The structure of the PTC can be built to provide continuity and can be easily adapted as the family’s  requirements change.

Tax neutrality  – The Isle of Man does not impose  capital gains or inheritance tax and  companies are subject to corporation tax at 0% (with exceptions for companies involved  in retail, banking or Isle of Man  property). Trusts do not have  obligations to file tax returns and no tax is chargeable unless there are Isle of Man resident beneficiaries.

Our team are professionally qualified and have a wealth of experience, making Eximia is well  placed to support and take responsibility for different roles, including acting as Trustee, Protector  and providing full trust administration. 

From initial planning and advice to the day-to-day administration of the Trust and any queries which  arise, our responsive team can support and achieve your goals. 

If you require further information regarding trust formation, administration or the provision of  professional Trustee services for an Isle of Man Trust, please feel free to get in touch with the team  at info@eximia-global.com. 

This blog is intended for informational purposes only and should not be construed as legal or financial advice.