Can I Set Up My Own Private Trust Company In California?

by Bruce Givner on January 4, 2012

We know that Nevada allows you to set up your own unregulated private trust company (“PTC”) as long as (i) you do not use the words “trust company” in the name; (ii) the PTC only acts as trustee for trusts benefiting lineal descendants of a named patriarch or matriarch; and (iii) the PTC does not hold itself out as being in the trust business. And, if you meet those requirements, the Nevada FID (Financial Institutions Division) will issue a letter to you approving of your PTC’s status. However, can you do the same thing in California?

California does not have legislation similar to the legislation in Nevada. Also, lawyers have generally been taught that a corporation can only act as a trustee if it has been licensed by the Department of Corporations as a trustee. However, there is still an opportunity for you to have your own PTC in California due to the definition of “trust business” in Financial Code Section 106: "the business of acting as…trustee under the appointment of any court, or by any authority of any law of this or any other state or of the United States, or as trustee for any purpose permitted by law." The California Department of Financial Institutions has focused on what the Legislature meant by "the business of" and has generally held that the entity must be engaged in more than one transaction with the intent to make a profit to fall within the confines of being in "the business of" trust business.

Contact us to discuss how you may choose to institutionalize your family wealth using your own private trust company.

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