What are the advantages of a PTC in a…

What are the advantages of a PTC in a system of family governance? 1) The PTC is the administrative center of family business, the "family seat." It creates a place for governance of all kinds to take place, and a place for family members to meet and discuss long-term wealth preservation. The need for a family center as the family moves into the third, fourth, and fifth generations will be readily apparent. 2) The PTC will be managed to express the family's values in accordance with the family mission statement. 3) The PTC will be a repository for the family history. 4) The PTC will often merge with an existing family office to concentrate all services under its umbrella. 5) The PTC has a perpetual life, thus providing a significant improvement in solving trustee succession problems. 6) The family members elect the board of the PTC using selec-tion criteria calling for excellence. The initial PTC board will be composed of family leaders and trusted outsiders. 7) The PTC board can evolve to meet the growth of family branches and the need for representation of all family power centers. 8) As the family evolves, PTC governance can be modified to reflect changes needed to meet new issues created by that evolution. 9) Family members will see P'TC board members as representatives since they both elect them and can choose whether or not to reelect them. 10) The PTC board is governed by the "business judgment rule" in making decisions. This standard of care permits individual PTC board members to make bolder investment decisions on the investment of individual trusts than they could if they were trustees of those individual trusts, where they would be governed by the "prudent man" or "prudent investor" rules. Families practicing investor allocation have found this PTC advantage particularly helpful. 11) The liability of PTC board members is limited to the capital of the PTC, assuming they have not acted recklessly or criminally. Individual trustees have no limitation on personal liability unless the particular trust agreement under which they are acting limits their liability. 12) PTCs have the right to create common trust funds to permit the pooling of individual accounts. This authority permits every family member, regardless of the size of his or her individual wealth, to participate in all investment sectors of the family asset allocation plan. It also greatly enhances possibilities for investor allocation. Common trust funds are not subject to SEC regulation, thus saving the hard costs of fees and the soft costs of time spent complying with regulations covering Registered Investment Advisors. 13) PTCs can be chartered in states with no state income tax. 14) PTCs will adopt affirmative trustee resignation policies, will instruct family members to provide in their trust agreements for a trustee's removal, and will advocate the use of protectors as alternative trustee/beneficiary dispute resolution mechanisms.

— from True North (Ethics, Integrity, Truth, Values)

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