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What is a Family Trust Company?
A family trust company (FTC) is a relatively new legal structure that can offer advantages in wealth management and estate planning for high net worth families. The FTC is like a mini financial institution that is permitted to serve as a fiduciary. It’s an entity — meaning a corporation or LLC, rather than a person. This entity is owned by a family, and it generally serves only that family. FTCs are prohibited from serving the general public.
FTCs offer a number of benefits to families looking for an alternative to the traditional individual (human) trustee or corporate trustee choices. If your family is struggling to identify potential trustees who are willing to serve and well-suited to your families’ needs, you may want to consider setting up an FTC. Some of the FTC’s benefits include:
- providing for orderly succession of trustee services — an FTC won’t become disabled or pass away like individual trustees;
- accommodating a wider variety of investments — an FTC is not subject to restrictions on certain holdings or over-weighted allocations like many traditional corporate trustees;
- avoiding state income tax — when carefully planned and structured, an FTC may change whether certain trusts are subject to state income tax;
- handling the family business — an FTC is well suited to families whose primary asset is a closely held business; and
- avoiding onerous investment advisor registrations — properly crafted FTCs will be exempt from the SEC registration requirements many family offices are facing.
Family Trust Companies in Florida
Oakstone Law’s founder Bob Kleinknecht has been an integral part of building the Florida Family Trust Company legislation which became law in June, 2014. He is a key member of the Florida Bar's Family Trust Company Subcommittee of the Estate and Trust Tax Planning Committee. Working on the Subcommittee with a number of other influential attorneys in the state of Florida, Bob has helped craft legislation that will give families the opportunity to create their own family trust company (FTC) right here in Florida.
Bob has also worked with FTC professionals in New Hampshire, Nevada and South Dakota, learning the ins and outs of the setup, structures and mechanics. Now that the FTC is finally coming to Florida, we expect a number of families will decide that Florida has more to offer than these other jurisdictions and move their existing FTC to Florida or create a new FTC in the state. We are ramping up to be ready for this exciting opportunity.
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Click below to watch a video of Estate Planning attorney, Bob Kleinknecht, share his knowledge on Family Trust Companies.
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