In The Bahamas, private trust companies act for individuals or firms, often as part of broader estate planning for families. Trust companies are empowered to do things on others' behalf such as making transactions or managing funds.
Like agents, trustees, and fiduciaries, trust companies take actions for others for someone's ultimate benefit. In fact, families can use trust companies as a substitute for a trustee of a family trust, which might otherwise have an individual trustee. For example, a trust company could hold the legal ownership of all the shares in a family business. The trust company would manage the shares and the business, while the family members remained as beneficiaries of the family trust.
The family members could receive distributions from the trust company derived from profits of the business, or receive salaries from the trust company for their work for the business. Further, the family members could serve on the board of the trust company, allowing them to make decisions about the family business's direction. Through the trust company, the family members could maintain involvement in the business without themselves holding any direct ownership in it.
The trust company structure has several advantages. It lets family members make decisions relating to the trust's administration, when with an individual trustee the family members would have little involvement in these decisions. It can add confidentiality protections for people concerned about privacy. Also, trust companies can operate forever, unlike individual trustees who must be replaced when they can no longer serve the trust.
To create a Bahamian trust company, one or more designating persons must draft a designating instrument (a written document) or direct that an instrument be drafted on their behalf. This instrument explains the makeup of the trust company. If there is more than one designated person named, they must be related to one another by blood or marriage. (See Banks and Trust Companies Regulation Act, 2000 and Banks and Trust Companies Regulations (Amendment) Act.)
Private trust companies are managed, in part, by registered representatives. These representatives must be either Central Bank of The Bahamas licensees or financial and corporate services providers with Central Bank approval. They provide services to trust companies, which may include acting as the Bahamian registered agent, secretary, or director. Officers of the trust company, such as family members, could fill these positions instead of the registered representative.
Trust companies sometimes must have a special director as well. The special director should have knowledge of trust administration or experience in some other area related to trust administration (such as law or finance). If a registered representative is both a director and a Central bank licensee, then the trust company does not need a special director.
To learn more about private trust companies, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.
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