The taxation benefits of a private trust company establishment: setting up a private trust company is a popular alternative to acting as a professional trustee of your company. It means that you, as the settlor, and your family, can be involved in the management and day-to-day running of the company in a way that would not be permitted as a professional trustee. A private trust company usually comprises of multiple underlying companies that own different types of assets, such as real estate property, portfolio investment and trading companies.
Private trust companies are often set up for families and other groups who have a shared interest. They are particularly popular with wealthy families as they offer an economy of scale, helping the family to manage multiple business interest more easily. A private trust company establishment also provides increased confidentiality, which is especially important if the family is high profile. It is ideal for families because it allows the control of companies to pass more easily between generations, without the ownership of the business needing to be changed.
There are many reasons a settlor would choose to establish a private trust company, including tax. It does not offer tax benefits as such, but can help to avoid unnecessary charges. A properly structured private trust company ensures that the settlor isn't liable to be personally taxed for the trust's income, which is a risk when they are directly involved in running the company. The settlor must assign control to the trustee in order, and it's important to employ a legal expert to form the company in order to avoid this tax risk.