Private Family Trust Companies (PFTC) can either be regulated or unregulated. The regulated trust companies generally receive a charter and the unregulated trust companies generally receive a license. South Dakota is the industry leader for regulated PFTCs. SDTC Services of Wyoming and STDC Services of Nevada allows us to also offer unregulated PFTC services to clients (see SDTCServicesofWyoming.com & SDTCServicesofNevada.com).
The question of whether to establish a regulated or an unregulated trust company is an important one. Many families select the regulated option so that there is much less of an opportunity to “pierce the corporate veil” as there is with an unregulated PFTC. The formalities associated with the regulated PFTC such as capital requirement, state audits, policies and procedures manual and compliance all help to ensure that the PFTC is a properly functioning entity and trustee. The estate tax issues are also generally lessened with a regulated versus an unregulated PFTC. Properly regulated PFTCs are also SEC exempt, which is important to many families.
SDTCS brings its regulated PFTC experience and services to its unregulated PFTC offering in Wyoming, and Nevada, providing substantial formalities for the operation of an unregulated WY PFTC or NV PFTC.
The chart below further illustrates the major distinctions between regulated and unregulated PFTC jurisdictions.
|Regulated PFTC||Unregulated PFTC|
|Family Net Worth||Generally exceeds $100 million (usually over $250 million)||Generally exceeds $25 million (sometimes lower)|
|Type of Entity||Typically LLC||Typically LLC|
|Owner||Family or family trust||Family or family trust|
|Liability Protection Insurance for Family Fiduciaries (D&O, E&O)||Yes||Yes|
|Promotion of Family Values||Yes||Yes|
|Ability to Work With Family Office and Family Advisors||Yes||Yes|
|Ability to Administer Public/Private Stock Without Diversification||Yes||Yes (usually)|
|Ability to Accommodate Broad and Sophisticated Asset Allocation||Yes||Yes (usually)|