Ultra-high-net-worth individuals (UHNWIs) – not to be confused with high-net-worth individuals (HNWIs) – are defined as individuals who hold assets worth $30 million or more.
While the difference between HNWIs and UHNWIs may seem trivial, the reality is that the ‘U’ represents not just a difference in net worth, but a difference in asset types, service needs and financial structuring.
As UHNWIs build their portfolio of assets, wealth preservation becomes increasingly complex. Traditional trust structures are not always able to fit the bill, says Greta Pender, director at Collas Crill Trust: ‘For a HNWI, you might act as trustee for a trust and company structure owning a straightforward investment portfolio of listed stocks and shares.
‘Ultra-high-net-worth individuals don’t tend to just have a pot of listed investments – they might have a blend of assets which could include alternative investments such as private equity and hedge funds; luxury assets such as cars, yachts and aircraft; property; and interests in operating businesses.
‘Setting up a typical trust structure where the client is handing over full legal ownership and control to the trustee can be quite a daunting prospect, given the scale and range of assets involved. This is where private trustee structures have advantages in providing both reassurance and more hands-on involvement for the client.’
Private trustee structures can take the form of a Private Trust Company (PTC) owned by a purpose trust or a Private Trust Foundation (PTF) with no shareholder. These structures act as a trustee to a specific trust or a group of connected trusts, often for one family.
PTCs and PTFs are popular for family office structuring in jurisdictions such as Guernsey, due to the island’s breadth and depth of expertise, underpinned by a range of corporate service providers. Trustees are familiar with Guernsey’s legal and regulatory landscape and can sit on the board to advise and ensure compliance accordingly. The opportunity here is for UHNW families to keep a grip on the reins and set the overall trust strategy while the trustee carries out their duty of preserving and enhancing the trust’s assets.
They are often set up so that either the settlor, family members (including the beneficiaries themselves) or trusted advisers can sit on the board or council with a professional trustee, offering an additional level of oversight compared with standard trust structures.
PTCs and PTFs can also house diverse assets such as luxury items, property and operating businesses under one solid roof built for bespoke asset protection and wealth preservation.
Kerrie Le Tissier, country head of Highvern’s Guernsey office, comments on the flexibility of these structures: ‘You can be flexible with the board composition of the structure and bring in different expertise. If property is held as an underlying asset, you can appoint a property expert to the board. If the structure holds investment portfolios, you can appoint a specialist investment adviser. It allows for more flexibility to bring in the right expertise and spread the risk.’
Le Tissier highlights the use case for high-value structures due to their bespoke nature. ‘PTCs and PTFs are not for everyone, but they are ideal for large, complex structures.’ She emphasises the importance of having an experienced fiduciary on the board or council who can manage any conflicts within the board.
As of September 2024, there were 126 PTCs in Guernsey, according to the Guernsey Financial Services Commission (GFSC), administered by 36 licensed fiduciaries. Eighty per cent of those PTCs have a representative from a licensed fiduciary on their board of directors, with the other 20 per cent having a licensee as a company secretary or resident agent.
Pender adds: ‘As the complexity of our clients and assets increases, it can be really useful to have the client family’s expertise on the structure’s board or council in terms of the overarching asset strategy and understanding the family’s values on a deeper level. Where the family wealth is from an operating business, which is then owned via the trust structure, there is a huge benefit to having the family’s knowledge and hands-on experience.’
Although well-placed to hold high-value, luxury assets, the most common asset class held under a PTC remains ‘liquid or near liquid assets’ (often investment portfolios that can represent a high proportion of the overall wealth). This is followed by ‘private company shares and other trading assets’, which includes ownership of operating businesses. Real estate comes in third, and other assets include boats, forestry, loans receivable, interest in partnership and thoroughbred horses.
Thirty-four per cent of settlors are resident in the UK, with 20 per cent from the EU and a further 17 per cent in the Middle East.
Pender touches on the advantages for succession planning and philanthropy: ‘The structure allows collaboration with the family through the PTC or PTF board or council. As an example, the settlor may have been CEO of an underlying operating business but is now preparing their successor from the next generation of the family. Having them involved further enhances their ongoing development and understanding of the trust structure, working alongside professional advisers. The PTC or PTF is an ideal stepping stone for UHNW families with prized businesses who see the need for succession planning but who are not ready for the complete divesting of control to a licensed fiduciary as would be the case with a traditional trust structure.
‘Clients may also want to segregate their own personal wealth and succession planning from their philanthropic efforts. A PTC or PTF can act as trustee of more than one trust for the same family group, meaning trusts could be established for the family’s own assets, and another separate trust within the structure could be for furthering the family’s charitable interests.’
Eighty-nine per cent of PTCs are incorporated in Guernsey – which, Le Tissier says, can be explained by Guernsey’s fantastic track record in this space, strong infrastructure and a straightforward process with the GFSC.
Guernsey PTCs and PTFs are typically non-regulated structures, with the trustee required to apply for limited permission from the GFSC. Similar structures in competitor jurisdictions are often subject to a much more onerous set-up process and much heavier regulatory involvement – for example, requiring the structure itself to be regulated and the appointment of a dedicated money laundering reporting officer. With a Guernsey PTC or PTF, the risk assessments and anti-money laundering control fall to the licensed fiduciary that administers the structure.
Le Tissier says: ‘Guernsey has a mature financial services industry and infrastructure that supports PTC and PTF structures. The island is a one-stop shop where the structure can be incorporated and a Guernsey-regulated fiduciary can be appointed to provide all the required services, providing ease of administration and allowing the family to begin its succession planning journey while still maintaining a comfortable level of control.’
