Private Trust Company (PTC): Firing the Bank to Run Your Own Family Office
Tax Tips / Governance
Private Trust Company (PTC): Firing the Bank to Run Your Own Family Office
💡 Executive Summary
- Problem: You set up a Dynasty Trust, but the “Corporate Trustee” (Big Bank) charges 1% of AUM ($500k/yr on $50M) and refuses to invest in your startup or crypto due to “policy.”
- Solution: Establish a Private Trust Company (PTC). It is a regulated entity (LLC or Corp) created solely to act as the Trustee for your family’s trusts.
- Result: You gain Total Control over investments, slash fees to a fixed operating cost, and maintain absolute privacy.
⚠️ THE COST OF ENTRY
A PTC is not for everyone. It requires significant setup (regulatory capital, legal fees) and ongoing maintenance ($50k – $100k/year). Generally, this makes sense only for families with $50M – $100M+ in trust assets, where the fixed cost is cheaper than the bank’s % fee.
A PTC is not for everyone. It requires significant setup (regulatory capital, legal fees) and ongoing maintenance ($50k – $100k/year). Generally, this makes sense only for families with $50M – $100M+ in trust assets, where the fixed cost is cheaper than the bank’s % fee.
For the Ultra-Wealthy (Tier L4), relying on a commercial bank to manage generations of wealth is often frustrating. Banks are slow, risk-averse, and prone to employee turnover. A PTC solves this by institutionalizing the family’s governance. You appoint the board, you write the investment policy, and you decide the distribution logic.
🧐 Core Mechanic: Bifurcation of Committees
A PTC separates powers:
1. Investment Committee: You and your advisors (Aggressive growth, Crypto, PE).
2. Distribution Committee: An independent party (CPA/Attorney) to say “Yes/No” to payouts (required for tax protection).
This structure gives you control over the money without triggering estate taxes.
A PTC separates powers:
1. Investment Committee: You and your advisors (Aggressive growth, Crypto, PE).
2. Distribution Committee: An independent party (CPA/Attorney) to say “Yes/No” to payouts (required for tax protection).
This structure gives you control over the money without triggering estate taxes.
Performance Simulation: Fee Analysis ($100M Assets)
Annual Trustee Fees
Big Bank Trustee (0.60% Tiered)
~$600,000 / Year (Variable)
Scales with Wealth
Private Trust Company (Fixed Cost)
~$150,000 / Year (Fixed)*
Economies of Scale
Trustee Options Comparison
| Feature | Individual Trustee (Uncle Bob) | Corporate Trustee (Bank) | Private Trust Company (PTC) |
|---|---|---|---|
| Liability | Personal (High Risk) | Corporate Shield | Corporate Shield (D&O Ins.) |
| Investment Flexibility | High | Low (Common Funds) | Unlimited (You decide) |
| Continuity | Dies with trustee | Perpetual (but turnover) | Perpetual (Family Controlled) |
“A PTC is not just about saving fees; it’s about freedom. It allows your Dynasty Trust to own a risky startup or a family compound without a bank compliance officer saying ‘it’s too risky.'”
🔗 Related BMT Playbooks (Internal)
🛡️ The Asset: The PTC serves as the Trustee for your Dynasty Trust ⚖️ The Jurisdiction: Why Nevada/South Dakota are top spots for PTCs ✅ The Context: PTC is the legal backbone of a Single Family Office🏛️ Institutional Resources (External)
📘 Industry Guide: South Dakota Private Trust Companies 🏛️ Best Practices: ACTEC Guide on PTC Governance 📜 Legal Framework: Example of PTC Legislation (Regulated vs Unregulated)
BMT designs for tax reality, not theory.