Private trust company trustee services: what an outside trustee still does

A private trust company is a company set up to act as trustee for one family. If you are weighing private trust company trustee services, the first question is simple: once the family sits on the board, what is left for a professional trustee to do? A good deal, as it turns out, and it usually begins with a single seat at the board table.

Why a family chooses a private trust company

Some families want closer involvement than a conventional trustee relationship allows. They hold an operating business, a portfolio that needs fast decisions, or assets that members of the family already understand better than any outsider. A company that acts as trustee lets the family take part in decisions through its board while the trust itself still follows its trust deed.

That closeness is also the risk. Decisions taken by relatives can drift towards what suits the directors rather than what the beneficiaries are owed. An outside trustee on the board is there to keep the company behaving like a trustee, not like a family committee. For the wider comparison of the two routes, see professional trustee company or private trust company.

The layers: trust, company, board, family

Four layers matter. The family sits at the top and owns the structure. A separate vehicle usually holds the shares of the company, so that ownership does not sit with any one person. The company is the trustee, and its board takes the decisions. Below it are the trust assets and the beneficiaries.

Each layer has its own paperwork and its own risks. Nobody should assume the structure is self-running because the family controls it.

The board seat: the entry point

The professional trustee usually enters as a director. This is a real office with real exposure, not an honorary title. The director takes part in meetings, reads the papers, asks the awkward questions and votes. Where the board is otherwise made up of family members, that vote is often the one that carries the trustee's discipline into the room.

Qualification matters. Under Article 20 FinIA (LEFin), the management of an authorised trustee must include at least two qualified persons, meaning people with suitable training and sufficient professional experience. That rule applies to authorised trustees, and whether it reaches a given private trust company depends on how the company is set up and whom it serves. This is a point for individual analysis, not a general answer. The same test of competence is a sensible yardstick for any director you appoint. To see how approval works, read FINMA and SO-FIT: what trustee approval means for you.

What an outside trustee still supplies

Directors

A professional director brings experience of how trusts fail as well as how they work. That includes understanding the duty to act for the beneficiaries, handling conflicts when one director is also a beneficiary, and recording decisions properly. Where the family wants a second professional voice, the question of one trustee or co-trustees arises in a new form.

Administration

Companies need a registered office, a secretary, minutes, registers, filings and accounts. The trust underneath needs its own records. A trustee with an administration team can run both sets of books without the family having to build a back office. Our description of day-to-day trust administration shows what that routine involves.

Oversight

Oversight is the part families notice least until it is missing. It covers a yearly compliance review, reporting duties, anti-money-laundering (AMLA / LBA) checks on the parties involved, and the exchange of information rules such as AEOI and CRS where they apply. A professional director can put these on the agenda and see that someone owns each item. For the compliance side, see compliance and reporting: what your trustee must do.

Committees and younger generations

Larger families often ask the board to work through committees: investments, distributions and family matters. The professional director can chair or sit on any of them, and can insist that distribution decisions keep their paper trail even when the discussion was friendly.

Younger members can be given an observer role. They attend, listen and learn how the company works, without a vote. This is a quiet form of succession planning, and it pairs naturally with trustee support for family meetings.

What the service does not cover

The outside trustee is not a substitute for the family's own judgement, and the service has limits:

• It does not make the company a risk-free arrangement. Protection of assets has limits and depends on how the structure is run.
• It does not replace tax advice for the country where you live. Residence, the nature of the assets and the beneficiaries' countries change the answer.
• It does not turn the professional director into the family's investment manager unless the documents say so.
• It does not remove the settlor's own duties or reserved powers; see settlor reserved powers and the trustee.

Fees depend on the structure and are discussed after the confidential assessment.

How the work runs: documents and decisions

A typical engagement runs through a set of documents and decisions, roughly in this order:

• The trust deed and any letter of wishes
• The company's articles and the shareholders' arrangements
• The identity and role of each director, and any conflicts
• The terms of the professional director's appointment
• The calendar of meetings, reports and reviews
• The rules for committees and for observers

Decisions follow: who holds the shares, who may appoint and remove directors, what the board may decide alone, and what needs the protector or the beneficiaries. Our page on working with a protector covers one of the checks that often sits beside the board.

An illustration

Take a family established in Lausanne that owns a manufacturing business. The parents set up a trust and a family-controlled company to act as trustee. Two of the three directors are the parents' adult children, who run the business. The third is a professional director from a Geneva trustee.

When a distribution request arrives from a cousin, the family directors lean towards refusing because they dislike the reason. The professional director asks the board to look at the trust deed and the stated purposes, minute the reasoning, and decide on that basis. The outcome may be the same, but it is now defensible. This is an example for illustration only and does not describe a real client.

What a confidential assessment establishes

The assessment looks at whether your structure needs an outside director at all, and in what form. It can establish who currently controls the board, whether the documents match how the company is run, and which duties are unowned. It also shows whether a different arrangement, such as a conventional trustee, would suit your situation better. If you already have a trust, an independent review of an existing trust is a related starting point.