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October 21, 2020
Cadwalader Private Wealth Group attorneys participated in a webinar titled “An Overview of Private Trust Companies,” hosted last week by CSM Capital Corporation and moderated by Chris S. Moore, the president and founder of CSM Capital. Webinar attendees included individuals from over a dozen jurisdictions.
Cadwalader’s Dean C. Berry, partner and chair of the Private Wealth Group, senior counsel Robert C. Lawrence, III, and associate Osvaldo Garcia explained the legal framework and features of regulated and unregulated private trust companies (PTC) across various U.S. jurisdictions. In recent years, PTCs have offered a flexible trustee alternative for families seeking to take a greater role in the administration of their trust structures. The Cadwalader team discussed several factors that families and their advisors should consider before using a PTC.
For one, Berry, Lawrence and Garcia emphasized that a PTC may require family members to make a meaningful commitment of time and expense. They noted that PTCs work best for families that share values and goals regarding their wealth. Conversely, PTCs can exacerbate existing family tensions.
Furthermore, they advised families to obtain professional legal advice on how the PTC is structured, and how it interacts with existing or prospective trust arrangements, to mitigate potential adverse U.S. tax consequences.
The discussion also focused on certain U.S. states competing for families to establish PTCs in the United States due to various considerations, such as disenchantment with institutional trustees or political and regulatory uncertainty in other jurisdictions.
“PTCs will become increasingly prominent in the private wealth world, particularly as more families become aware of them,” Lawrence said.
Added Garcia: “This should compel practitioners and clients to become acquainted with the concept and recognize both its advantages and disadvantages.”
Berry counsels clients on developing and implementing tax-efficient strategies for the management and transfer of private wealth, with a focus on complex U.S. and international trust and estate planning.
Lawrence, former chair of the Private Client Group, is a leading authority in international and domestic tax, trust, succession, and personal planning matters. He advises high net worth individuals and families regarding tax-efficient structures for their U.S. and global holdings, with emphasis on the minimization of taxation, the management of holdings, and their transfer to family members, entities, trusts and/or charities.
Garcia’s practice focuses on international and domestic estate planning, estate administration, trust administration, tax controversies and matters of international regulatory compliance.