Tennessee Private Trust Services

Holland & Knight's Tennessee Private Trust Services was formed to assist individuals and families in the management and operation of private trust companies.

High-net-worth individuals seeking comprehensive asset management/reporting solutions often have limited options. They can either use one of the big box institutions or develop their own private support organization, usually in the form of a family office. The use of a commercial trust company as trustee can become prohibitively expensive as the number and size of trusts proliferates, and continuity remains a concern even though family members may be named in supporting roles.

For families of sufficient wealth, a private trust company (PTC) is an ideal solution to the above dilemma. A PTC is an attractive alternative to the use of either corporate or individual trustees, and can provide fiduciary services without pressure to convert assets or the cross-selling of other products.

Our Tennessee Private Trust Services tailors services to your needs and desires, ranging from purely administrative support and recordkeeping to intensive, hands-on involvement across a wide variety of assets. If the family wants an individual – family, friend or advisor – to have a key role in the trust administration, Tennessee Private Trust Services can provide the necessary structure and support to that individual fiduciary at a much lower cost than that of a proprietary family office organization. Should a family already have a family office in place, our attorneys and professionals can still provide the family's PTC with trust administration and other related services for the family trusts.

What Is a Private Trust Company (PTC)?

Trust administration includes the daily activities required to manage and oversee trusts in order for the PTC to fulfill its fiduciary responsibilities. These activities include accounting and reconciliation, beneficiary communication and reporting, regulatory compliance (if applicable), document retention and storage, and the provision of physical offices, if needed. A critical function is the monitoring of trust activity to ensure that trusts are being administered in adherence to the terms set forth in governing documents. Tennessee Private Trust Services can also serve as a trust protector if desired by the client.

Why Form a PTC?

PTCs allow trusted advisors, friends and family members to continue to serve the family while being shielded from the personal liability exposure to which individual trustees are exposed. In addition, those same individuals can be assisted in the discharge of their responsibilities by folks like us, even though we will not be serving as fiduciaries.

• Customized Services. The PTC can customize its services for the family's needs compared to commercial trust companies.
• Limits on Liability. Use of a PTC eliminates fiduciary liability risk for current individuals serving directly as trustees of the family trusts.
• Continuity of Administration. A PTC can provide continuity of trusteeship compared to an individual trustee, who may become incapacitated or die. In addition, the PTC can also provide a mechanism to provide structure in administering several different trusts for the family members.
• Informed Distribution Decisions. The Distribution Committee of the PTC will be directly responsible for addressing any difficult distribution decisions that could otherwise create family conflict.
• Flexibility in Investing. A PTC has the flexibility to invest in various types of investments that a commercial trust company may prefer not to hold, such as hedge funds or real estate. In addition, this flexibility potentially offers relief from the requirements of investment diversification, thereby permitting concentrated investments in specific industries and/or companies (e.g., a closely held family business). Moreover, since the PTC is technically a bank, it is exempt from having to register as an investment advisor with the U.S. Securities and Exchange Commission (SEC).
• Stability of Staff. Unlike commercial trust companies, in which there may be turnover of staff, the staff of a PTC will likely be retained longer, thereby fostering a stronger ongoing relationship between staff members and the beneficiaries of the trust.
• Efficient Organization. A PTC provides a structure for the administration of trusts through a corporate organization, and thus provides for a more efficient means of providing oversight of several trusts.
• Family Business Succession Planning. Family business interests may be held in trusts of which the PTC votes the family business stock, which can promote maintaining the business in the family.
• Tennessee Department of Financial Institutions (TDFI). The TDFI is knowledgeable of PTCs and support more PTCs being established in Tennessee

Why Form A PTC in Tennessee?

Tennessee is a very attractive state in which to form trusts. The necessary characteristics for Tennessee to become a recognized "trust haven" state – favorable trust, asset protection and tax laws – have been in place for more than a decade. In a recent national survey, Tennessee was ranked third in dynasty state rankings, fourth in trust decanting state rankings and tied for sixth in domestic asset protection. There is no state income tax and situs requirements to establish nexus are minimal. Generally, individuals and families establishing trusts or forming a PTC in Tennessee find that the state excels in:

• asset protection
• directed status
• dynasty duration
• flexibility in decanting
• progressive trust laws

Our Services

Asset Management

Our asset management role is to serve as an advisor to our clients. In this role, we manage and coordinate the activities of consultants, registered investment advisors, custodians and others involved in client asset management activities.

Charitable Assistance and Administration

In many cases, our clients' philanthropic activities are a critical element of their wealth strategy. Our services include the creation and funding of public charities and the organization as well as management of private foundations. Tennessee Private Trust Services will also assist clients in designing, implementing and administering giving programs that align with their values and interests.

Private Trust Company Meeting Planning and Facilitation

Our team will plan and facilitate PTC and family board meetings, if desired. Based on our wealth of experience in the family office space, Tennessee Private Trust Services can provide consulting and back-office support for a client's existing or planned family office operation. Many of the tasks typically managed by a family office can be facilitated by our team, operating as an extension of your family office.

Trust Administration

Trust administration includes the daily activities required to manage and oversee trusts in order for the PTC to fulfill its fiduciary responsibilities. These activities include accounting and reconciliation, beneficiary communication and reporting, regulatory compliance (if applicable), document retention and storage, and the provision of physical offices, if needed. A critical function is the monitoring of trust activity to ensure that trusts are being administered in adherence to the terms set forth in governing documents. Our team of lawyers and professionals can also serve as a trust protector if desired by the client.

Wealth Transfer Planning Coordination

Tennessee Private Trust Services can coordinate clients' tax, legal and estate planning to ensure that taxes are minimized, wealth is preserved and nonfinancial goals are achieved.