Bahamian Private Trust Companies act as trustee for a particular trust or group of trusts. These trusts usually are formed by and benefit a wealthy family. Families have begun using Private Trust Companies to structure estate planning and inheritances. The Private Trust Companies balance families' desires to remain in control of assets with the benefits of placing assets in trust for the future.
A Private Trust Company (PTC) is formed under the Companies Act or the International Business Companies Act. A settlor (a person who is forming a trust and placing his assets in the trust) then names the PTC as trustee of the trust. The PTC holds legal title to the assets placed in the trust, such as ownership shares in a family company. Shares in the PTC itself can be owned by other family members or usually, by a charitable or purpose trust. These types of trusts then state that their only purpose is to own the PTC shares. As a result, effective ownership of the PTC and the assets remain in the family.
PTCs may serve as trustee for more than one trust. Other settlors beyond the initial settlor must be related to the initial settlor. All PTCs must have a registered representative that is a separate legal entity, is either a licensee of the Central Bank of The Bahamas or approved by the Central Bank, and is resident in The Bahamas. Registered representatives must have paid-up share capital of $50,000 or more. If a representative is not a licensee of the Central Bank, it must pay an annual $2,500 fee. Registered representatives must follow regulations issued by the Central Bank and perform record-keeping functions for the PTC.
All PTCs must have a special director with trust administration or related experience and a good reputation, unless the registered representative is an officer of a licensee of the Central Bank of The Bahamas. However, PTCs do not have to obtain a business license or a license from the Central Bank of The Bahamas to operate.
There are a few other advantages to using a PTC as trustee. Because the PTC is a company, it will exist into perpetuity, unlike an individual trustee. Further, since the family essentially controls the PTC's operations, it eliminates some costs inherent in using an institutional trustee – in part because the family can choose its own advisors and change them as needed. The family that uses a PTC gains a measure of confidentiality regarding their financial affairs that they would not have with other types of trust arrangements.
To learn more about private trust companies, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.