Private Trust Companies in Bermuda

A “Private Trust Company” (“PTC”) is a Bermuda exempted company incorporated with the ability to act as the trustee of one or more specific family trusts or other specially grouped trusts. However, a PTC is not permitted to offer professional corporate trustee services to the general public.

Uses for a PTC

Many clients are resistant to giving up ownership or control of their assets to a commercial trustee. A PTC allows family members or trusted friends to become involved in the trust company either as shareholders of the company or as directors. Where appropriate, this type of trust arrangement allows the client to have a greater degree of control over his own trust. Care must, of course, be taken to ensure that the trust is properly administered and not treated simply as an agency of the client and to ensure that the trust is valid under Bermuda law.

In some instances, trustees may be reluctant to act if there is a potentially substantial liability. The PTC offers a solution as the exposure to the professional trustee is usually more acceptable. The PTC acts as the trustee but the professional trustee in Bermuda, such as Hamilton Trust Company Limited, can provide directors for the PTC as well as the necessary corporate administration and also provide the fiduciary administration of the PTC.

Legal Requirements

A Bermuda PTC is incorporated in the same manner as any exempted company. This means that the application to the Bermuda Monetary Authority to incorporate must include financial information and the names, addresses and occupations of the individuals who beneficially own the PTC. The name of the family which will constitute the principal class of beneficiaries in the trust or trusts must also be given to the Bermuda Monetary Authority. However, this information is not a matter of public record and is treated with complete confidentiality by the Bermuda Monetary Authority.

In the objects of the Memorandum of Association of the PTC, the name(s) given to the trust(s) for which the PTC will act as trustee must be stated. However, the name(s) given to the trust(s) does not have to contain the family name. Thus, even though the Memorandum of Association is a public document the family name does not have to be a matter of public record. The wording in the Memorandum of Association can allow for the inclusion at a later date of other trusts to be approved by the Minister of Finance.

A PTC is exempt from certain regulations in the Trusts (Regulations of Trust Business Act 2001) that are applicable to trust companies offering services to the public. However, it should be noted that a PTC is allowed to use the word “trust” or “trustee” in the company name.

Ownership of the PTC shares

The decision as to how the shares of the Bermuda PTC are to be held is usually dictated by the client’s estate planning needs and also the need for confidentiality.

The names of shareholders of a Bermuda PTC are a matter of public record and for reasons of confidentiality it is often therefore desirable to have the shares held for family members by other parties or vehicles such as:

  • Nominees which can be provided by us.
  • By the trustees of a separate family trust.
  • In an anonymous vehicle such as a purpose trust (see note a. below) which has been set up by declaration of trust by an independent trustee.

A purpose trust is a trust set up for a purpose rather than for specified individual beneficiaries, therefore, the purpose can simply be “to hold the shares of XYZ Company”. Thus, a purpose trust can be established to hold the shares of the PTC. A professional trustee can then be appointed to act as trustee of the purpose trust. In this way ownership of the shares can be divorced from the family.

How can Hamilton Trust Company Limited assist?

Hamilton Trust Company Limited can assist with these types of structures in the following ways:

  • By providing directors for the PTC. Often these directors will work in conjunction with family members appointed as directors.
  • By providing corporate secretarial services for the PTC.

The family trust for which the PTC acts as trustee can also be administered by Hamilton Trust Company Limited acting as a fiduciary agent and we can provide our expertise and knowledge of Bermuda trusts to ensure that the trusts are run in a proper and efficient manner.

Through our sister firm, International Managers Bermuda Ltd., we can provide accounting services for the PTC and the trusts for which it acts as trustee.

If the shares of the PTC are held in a purpose trust, Hamilton Trust Company Limited can act as trustee of that Purpose Trust.