Private Trust Companies (PTCs): A strategic approach for family assets in Liechtenstein

What is a Private Trust Company?

A Private Trust Company (PTC) is a company that acts as trustee of one or more trusts. This function is normally performed by a licensed trust company. Unlike a traditional trust company, which manages trusts for different families, a PTC serves solely to manage the trusts of a single family and protect its assets.

Advantages of a Private Trust Company

Family control

A key advantage of a PTC is the control exercised by the family. Members of the family or their trusted representatives sit on the PTC’s management committee, which means that the family itself decides on the management of its assets. This creates a private, customised trust company that is fully tailored to the family’s needs.

Asset protection

PTCs provide a robust structure for asset protection. They allow assets to be structured so that they can be divided between family members to avoid conflict after the death of the head of the family. Assets can also be protected from risks or access by creditors.

Estate planning

Estate planning is another key benefit of PTCs. By setting up a PTC, assets can be transferred to subsequent generations so that descendants can also benefit from the assets. This ensures sustainable and long-term wealth planning within the family.

Legal framework

Public limited company

Traditionally, a PTC is set up as a public limited company. The shares in the PTC are held by a purpose trust in order to prevent the shares from being attributed to the family members under civil and tax law. This offers a high degree of flexibility and protection of assets.

Establishment

A more cost-effective alternative is to set up the PTC in the legal form of a Liechtenstein establishment. This variant offers similar advantages to the public limited company, but is less cost-intensive and administratively complex.

Trust company

Another option is to set up a PTC as a trust company (trust reg.), which is ownerless and therefore has no shareholders. This variant offers a high degree of flexibility and is also a cost-effective legal form.

Taxation of a Private Trust Company

The taxation of a PTC in Liechtenstein is subject to income tax of 12.5% of the taxable net profit. As PTCs do not generate taxable income, the tax burden is limited to the minimum income tax of CHF 1,800.

It is important to note that tax liability in Liechtenstein requires that the strategic management decisions of the PTC must be made in Liechtenstein.

International aspects

A foreign PTC can transfer its registered office to Liechtenstein without having to be dissolved and re-established. This offers a flexible way of utilising the advantages of the Liechtenstein legal framework while at the same time meeting international needs.

Why a Private Trust Company in Liechtenstein?

Liechtenstein offers an attractive environment for setting up a PTC. In addition to the tax advantages and political stability, the country offers a well-developed legal framework to protect assets. The ability to set up PTCs in different legal forms provides additional flexibility and allows families to choose the best structure for their specific needs.

Practical examples and case studies

Example 1: Estate planning for entrepreneurs

A successful entrepreneur decides to set up a PTC to secure his business assets for the next generation. Through the PTC, the entrepreneur can ensure that the business remains in the family and that the succession runs smoothly. The family members are involved in the management of the PTC, which ensures continuous control and co-determination.

Example 2: Protection of family assets

A wealthy family uses a PTC to protect its assets from external risks and legal disputes. The PTC structures the assets so that they remain within the family and are protected from access by third parties. This creates long-term security and stability for the family’s assets.

Conclusion

Private trust companies offer wealthy families an effective way of structuring and protecting their assets. The involvement of family members in the management of the PTC ensures a high degree of control and flexibility. The various legal forms and tax advantages make the PTC an attractive instrument for asset management. At PRÄSIDIAL-ANSTALT, we are proud to be able to offer our clients the advantages of this exceptional structuring option. Whether you are starting a business, structuring assets or looking for innovative financial solutions, Liechtenstein offers the right framework for your success.