Firing the Bank: The Private Trust Company (PTC) Strategy
Firing the Bank: The Private Trust Company (PTC) Strategy
Why pay a corporate trustee 1% of your wealth forever? How to establish your own regulated Trust Company to slash fees, gain liability protection, and keep decision-making inside the family.
Executive Summary
- The Problem (Corporate Trustees): To protect a Dynasty Trust, you often need an independent trustee. Big banks charge **0.5% to 1.5% of AUM** annually. On a $50M estate, that’s $500k/year for a service that is often slow, bureaucratic, and impersonal.
- The Solution (The PTC): You create a **Private Trust Company** (usually in Wyoming, South Dakota, or Nevada). This is a legal entity chartered to act as the Trustee for only one family. You own the company, and you appoint the Board of Directors.
- The Power Shift: Instead of asking a stranger at JP Morgan for a distribution for your granddaughter’s wedding, the decision is made by the **”Distribution Committee”** of your PTC (staffed by trusted advisors and family members). It separates “Management of Assets” from “Management of Requests.”
Situs Selection is Critical
Location Matters: You don’t form a PTC in New York or California. You form it in a jurisdiction with No State Income Tax, strong Asset Protection laws, and specialized PTC statutes.
👉 Top Tier: South Dakota, Wyoming, Nevada, Tennessee. These states allow “Unregulated” or “Lightly Regulated” PTCs that don’t require massive capital reserves.
Mechanic: The Governance Engine
Simulation: Cost of Governance ($50M Trust Assets)
| Feature | Individual Trustee (Uncle Bob) | Corporate Trustee (Bank) | Private Trust Co. (PTC) |
|---|---|---|---|
| Continuity | Low (Bob dies) | High (Bank remains) | High (Perpetual entity) |
| Liability | Personal Liability | Limited | Corporate Shield |
| Decision Speed | Fast (but risky) | Slow (Committee) | Fast (Family Board) |
“A PTC is the boardroom of your family dynasty. It professionalizes the emotional. Instead of asking ‘Dad’ for money, the heir submits a proposal to the ‘Distribution Committee.’ It changes the conversation from entitlement to stewardship.”