One of the key advantages of forming a family trust company (“FTC”) is the ability for families to remain involved in and maintain control over the family business, while also preparing for the future of both the family and its business. The formation of an FTC can help families achieve this delicate balance between present and future by providing a flexible and adaptable structure allowing family participation at the FTC Board and Committee level. This flexibility permits individual family members to decide if they want to remain actively involved in shareholder decisions or choose passive involvement while having an economic benefit in the family business.  Moreover, it can do so while insulating family advisors and family members from personal fiduciary liability when serving as Trustee of family trusts.

The primary means by which family members remain involved in the family business shareholder decisions after the formation of an FTC is by serving as members of the FTC’s Board of Directors and Committees. Family members can serve on various committees, which are created depending upon the specific needs  of each family.  FTC Committees can include, but aren’t limited to, Investment Committee, Trust Committee, Education Committee, Philanthropy Committee, Family Business Asset Committee, Entrepreneurial Committee, and Discretionary Distribution Committee. The primary limitation here is that a family member cannot serve on a committee involved in making discretionary distributions. Family members may also choose to select trusted family advisors to serve on the FTC’s Board of Directors or Committees based on their expertise. With a makeup of trusted advisors and family members,  an FTC’s Board and Committees are comprised of individuals who understand the family, its history, and its vision for the future. All of these individuals can ensure that family values and goals not only influence, but are a part of, the decision-making process of the FTC.

Retaining control over the family business through an FTC also benefits families interested in keeping the family cohesive and working together across generations. An FTC creates opportunities for development and control over implementation of family strategy – particularly wealth strategy. An FTC can provide educational and engagement opportunities for all family members, including the rising generation, regardless of whether they are actively involved in the operational aspects of the family business. 

From a Case Study perspective, families frequently would like to vest shareholder decisions in a smaller group of family members and trusted advisors that has the understanding and expertise to make those decisions. An FTC can create a Committee focused on the family business asset, while having a separate Committee to oversee the investing of liquid assets. The expertise required for each Committee differs, allowing the family to focus their energies where best suited. Creating job descriptions for the various positions in the FTC clearly outlines the required experience as well as characteristics that are important to the family – for decision making and perpetuating the family values across future generations. As family members are clear on the requirements and expectations for roles within the FTC, it creates transparency and therefore, promotes harmony.