By Therese Ryan, Client Services Director, Isle of Man
For high-net-worth (HNW) individuals and families, traditional trusts can be powerful tools for asset protection and succession planning. But for families seeking greater control over how those trusts are managed, a private trust company (PTC) in the Isle of Man may offer the ideal solution.
Family offices in particular are increasingly turning to PTCs as a way to preserve the core benefits of a trust structure, such as wealth protection, confidentiality, and multi-generational planning, while gaining more flexibility and decision-making control. In the Isle of Man, this trust structure is particularly attractive thanks to its efficient legal framework, robust regulation, and the ability to keep management and control offshore.
What is a PTC and how does it work?
A private trust company is a corporate entity formed to act as trustee for one or more trusts. The PTC can be controlled by members of the family or their trusted advisers, with the support of a licensed trust service provider.
Unlike a traditional trustee, a PTC structure enables the family to play a direct role in governing the trust, usually through board representation. This creates a highly customised arrangement that can align with the family’s values, goals, and decision-making.
Incorporating a PTC in the Isle of Man is a straightforward process, identical to incorporating any other Isle of Man company. The process can take as little as one hour once all take-on formalities have been achieved.
Why use a PTC? Key benefits for family offices
#1: Control
A PTC allows family members or trusted advisers to sit on the board and make trustee decisions, provided they act in accordance with the trust deed and Isle of Man trust law. Families can therefore stay closely involved with how assets are managed, while still outsourcing the day-to-day burden of administering the trust.
#2: Transferability
If a family wants to change the professional fiduciary, they can simply terminate the administrative agreement with the service provider and enter into an engagement with a new service provider. This simplifies transitions and preserves the core structure of the trust, ensuring continuity.
#3: Confidentiality
PTCs can be owned through an Isle of Man purpose trust (created in accordance with the Isle of Man Purpose Trusts Act 1996), offering an additional layer of confidentiality, while at the same time dealing with the burden of ownership. This is particularly appealing to HNW individuals and families who value discretion in their financial affairs and wish to avoid unnecessary requirements being placed upon them should they own the PTC personally. PTCs can also make confidential philanthropic payments discreetly and effectively.
#4: Flexibility
Because the family or its trusted appointee sits on the PTC board, decisions can be made quickly and easily, which can expedite decision-making processes and adapt more readily to changing circumstances. This level of agility is especially important when the trust holds operational businesses or investment portfolios. PTCs can oversee multiple trusts that hold a variety of assets, including operating companies, property, art, and other luxury assets.
#5: Legal and regulatory framework
The Isle of Man has a well-developed legal system and a stringent regulatory framework. The trust laws in the Isle of Man allow for a variety of trust structures, including discretionary trusts, reserved power trusts, and purpose trusts. This flexibility enables the tailoring of trusts to meet specific needs, whether for succession planning, asset protection, or charitable purposes.
Managing risks via good governance
As with any trust structure, governance considerations are critical. These include:
- Management and control: The residency of a trust typically depends on where the majority of trustees are resident. Management and control can remain in the Isle of Man through a split board being appointed to the PTC
- Sham risk: To prevent the structure from being attacked as a sham, there must be clear evidence that the settlor and the PTC intended to establish a legitimate trust structure. This structure should be managed as such with proper documentation, administration, and the support of a licensed trust service provider
- Director liability: Directors of PTCs have a duty to act in the best interests of the company, and in their role as trustee they have a fiduciary responsibility to the beneficiaries
Establishing a PTC: How we can help
We work with many high-net-worth families based in the UK and worldwide. Some have been our clients for over 10 years and we’re helping them prepare for the transfer of the family wealth to the next generation.
Ensuring efficiency throughout, we can establish a PTC in which we act as directors, along with family members if so desired. The PTC, in its capacity as trustee, holds the underlying assets, such as an operating company, shares in the family business, real estate and investment portfolios.
As trustees, we work closely with the relevant professional advisors and the families to involve the next generation, educating them on generational wealth preservation, which provides immense long-term value and strengthens both family and professional relationships. By fostering open communication and transparency, the trustee helps build trust, clarity and a shared understanding around the purpose and responsibilities of managing family wealth.
This collaborative approach can help prevent conflicts and promotes aligned decision-making to ensure the family’s legacy and values continue. Ultimately, proactive education and support can help to strengthen both the financial and relational foundations of the family, helping to fulfil the settlor’s objectives and safeguarding family wealth for future generations.
Whether you’re setting up your first PTC or reviewing the structure of existing trusts, we offer:
- PTC incorporation and trust structuring
- Ongoing administration and compliance oversight
- Risk management/reporting and AML/CFT monitoring
- Maintenance of the statutory records of the trustee
- Quarterly board meetings and ad hoc board meetings of the trustee to consider the performance of investments and strategies for the future
- Preparation and circulation of board minutes
- Accounting, VAT accounting, tax compliance and reporting
- Undertaking frequent reviews of the structure
- FATCA, CRS and other regulatory reporting as required in respect of the trustee
- Attending to all required filing under relevant Isle of Man law for the trustee and underlying companies
Contact our Isle of Man team today to explore how a PTC could support your family office’s succession planning.
For more on succession planning, check out our in-depth global guide to trusts and foundations for family offices.
