A Private Family Trust Company (PFTC) is typically a family-owned LLC (i.e. pass through entity or corporation), that serves as the trustee for the family’s trusts. These trusts may be both trusts governed by the laws of the PFTC state as well as trusts governed by the laws of a non-PFTC state (i.e. generally the resident state of the family and the Family Office).
A PFTC has the same internal structure as most business entities. It has a governing board that elects its officers and appoints members to various committees (optional). The Board and Committees may be comprised of family members and their trusted advisors. Potential committees include an investment committee, which oversees the PFTC’s exercise of its investment discretion, and a distribution committee, which oversees the PFTC’s exercise of its discretionary distribution power.
The requisite number of board members varies among the more favorable PFTC jurisdictions, but some require a resident board member. Additionally, most families prefer to have at least one resident board member because this provides a better nexus to the PFTC state. An independent resident board member may also provide an added administrative convenience: the independent board member’s presence in the PFTC state precludes the necessity of family members sitting through the more administratively focused aspects of board meetings. If desired, the experienced resident board member may also offer invaluable mentoring to a family based on his/her PFTC experience.