What Is a Private Family Trust Company (“PFTC”)?
A Private Family Trust Company, or PFTC, is a company owned and controlled by family that serves as trustee for the family’s trusts. Put simply, it gives your family its own corporate trustee instead of relying on a bank, public trust company, friend or relative. The PFTC itself—not any one person—serves as trustee. Family members and trusted advisers can serve on the company’s board and committees, allowing them to make investment, distribution and other fiduciary decisions under written policies. Independent advisers play an important role, especially when decisions—such as discretionary distributions—require independence or involve sensitive personal information. A PFTC does not take deposits or offer trust services to the public. Its role is to administer family trusts, help protect family assets, and carry the family’s vision and values forward across generations.
Which States Have Private Family Trust Company Laws?
Because PFTCs are created under state law, they can be formed only in states with an authorizing statute. These states include Ohio, South Dakota, Wyoming, Nevada and Tennessee, among others. The best location will depend on a specific family’s needs, as each state has different rules for licensing, regulatory examinations, minimum capital, annual filings, resident officers, physical offices, and even the definition of “family.” Some states permit both regulated/licensed and unregulated/unlicensed PFTCs, while others only allow regulated/licensed PFTCs.
Can You Form a PFTC in a State Different from your Family Business, Family Office, or Majority of Family Members Residences?
Yes. Family members do not have to live in the state where the PFTC is formed. You may organize the company in a state whose laws fit your goals even if your family members, trusts, and assets are located elsewhere. However, the connection to that state must be substantive—not simply a mailing address. Depending on the jurisdiction, the PFTC may need a registered agent, local office, resident officer or director, in-state meetings, records, bank accounts, or other ties to the chartering state. Some trust documents may also need to be updated before the PFTC can serve as trustee. One of the first considerations is unregulated/unlicensed versus regulated/licensed. Based on this decision, certain states may not be high priorities to consider.
Is Your Family a Good Candidate for a PFTC?
There is no magic minimum number of family members, trusts, or assets required to make a PFTC part of a family’s wealth strategy. A better question is whether the benefits of a permanent, centralized, and family-informed trustee are important to a family. A smaller family may benefit from a PFTC if it owns a significant operating business or has several long-term trusts. A larger family may benefit when multiple branches, different trustees, and geographic distance make communication and decision-making more difficult.
How Many People and Trusts Do You Need for a PFTC?
The number of trusts matters less than their complexity. A family may only have one important dynasty trust, but support creating a PFTC, especially if they expect to add more trusts over time. On the other hand, a family with dozens of trusts with different individual trustees causing inconsistent reporting and trustee-succession concerns may choose a PFTC to address their concerns. A PFTC can bring all the family trusts under one permanent trustee, standardize administration, and give beneficiaries a more consistent experience. It’s important to remember that documented meetings, tax reporting, account reviews, policies, and documentation are still essential—but a PFTC can move the burden from individuals to an organized governance system supported by carefully selected service providers.
What Are the Benefits of a Private Family Trust Company?
A PFTC can make estate planning and trust administration more coordinated. Each grantor has a known current and successor trustee, institutional knowledge stays with the family, and shareholder decisions for business interests held in trust can be centralized. A PFTC can also draw a clear line between running the family business and governing its ownership: the business board continues to manage the company, while the PFTC acts as shareholder through its board or a Family Business Asset Committee. That separation can reduce confusion and make ownership transitions more orderly.
Is Your Family Ready to Run a PFTC Together?
The final test is about people, not money. A PFTC works best when family members want to stay connected, are open to learning and are willing to devote time to meetings and decisions. It gives generations a voice in conversations about stewardship, investments, philanthropy, education, and the family business.
For the right family, a PFTC can offer the permanence and discipline of a corporate trustee along with the knowledge, flexibility, and values of the family—creating a practical framework for protecting a family business and stewarding wealth across generations.
Information provided in this article is general in nature, is provided for informational purposes only, and should not be construed as financial, tax or legal advice. The views expressed by the author are based upon the data available at the time the article was written.
