Licensed trustees and trust companies

For a U.S. citizen, trustee rules depend on the jurisdiction and the trust activity involved. Trustee rules cover regulated trust company business, who may act as trustee, and how private trust companies differ from service providers acting for the public.

What licensing rules cover

Licensing rules govern specified trust company activities, though the scope and exceptions differ by jurisdiction. Nevada defines trust company business as holding oneself out as available to act as a fiduciary in the state and undertaking that work regularly as a business.^[3]

Nevada generally requires a retail trust company to hold a license to conduct that business, subject to exceptions within the chapter. The statute also distinguishes retail trust companies from family trust companies and other categories, so the category matters when identifying which provisions apply.^[3]

Jersey uses registration and a Code of Practice for persons carrying on trust company business. The Code applies to persons registered by the Jersey Financial Services Commission, and sets requirements for governance, customer conduct, and financial resources.^[2]

Singapore's Trust Companies Act governs licensing and regulation of trust companies. The Monetary Authority of Singapore provides a licence application for trust business and notices for certain exempt persons providing trust services.^[4]

In Guernsey, the law regulates trust and corporate service providers. Licensing applies to persons conducting specified regulated activities by way of business, including trust and foundation services, with an exemption route for certain private trustee vehicles subject to stated conditions.^[12]

Who may act as trustee

The rules identify different categories of people and entities that may serve as trustees. In Mauritius, a trust must have at least one qualified trustee, defined as a licensed management company or another Mauritius resident authorized by the Financial Services Commission to provide trusteeship services.^[11]

A Singapore proposal would require a noncharitable purpose trust to have a trustee that is a licensed trust company or a qualifying Private Trust Company. The proposal has not been enacted.^[10]

In Guernsey, private trust vehicles may serve as trustees, and some may qualify for an exemption from licensing. The listed conditions include acting only for a specific trust or connected trusts and being administered by a company licensed under the Fiduciaries Law.^[12]

Delaware law on retaining a fiduciary's own capital stock concerns a bank or trust company already acting as a fiduciary and authorized to do so. It allows that fiduciary, subject to statutory standards and instrument terms, to retain shares of its own capital stock in a trust estate.^[1]

Private and public trust companies

A private trust company is generally established to act as trustee for a defined family or connected trust structure. A professional trust company provides trustee services to clients. Private trust companies have directors who may include family members and professionals.^[8]

Public or professional trust companies carry on trust business as a service activity under the applicable jurisdiction's regulatory framework. In Nevada, the statute defines a trust company as a corporation or limited-liability company licensed under the chapter and engaged in trust company business, while Jersey's Code applies to registered persons carrying on trust company business.^[2]^[3]

There is no single worldwide definition of a private trust company or licensing rule for every jurisdiction. Nevada and Jersey, along with Singapore and Guernsey, use different statutory or regulatory categories, with particular exceptions and conditions set by each framework.^[3]

The label alone does not determine whether a company needs a licence or registration. The relevant jurisdiction's definition of trust company business, entity category, and any stated exemption terms govern licensing and registration requirements.^[2]

Oversight and operating requirements

Regulated status carries continuing requirements under the applicable frameworks. Jersey's Code describes ongoing fitness assessments for registered persons and key people, including integrity and competence, and also financial standing and organizational structure.^[2]

Nevada's licensing chapter assigns the Commissioner a role in considering applications and examining licensees. For foreign independent trust companies soliciting business in the state, the Commissioner may also require a surety bond as a condition of solicitation approval.^[3]

Family participation on a private trust company's board does not by itself determine its regulatory status.

Trust company regulation and oversight

Licensing and supervision

In the Cayman Islands, the Cayman Islands Monetary Authority regulates trust business through licensing or registration and ongoing supervision under the Banks and Trust Companies Act and the Private Trust Companies Regulations.^[13]

FINMA states that portfolio managers and trustees must obtain its authorisation to carry out their activities and are supervised by a supervisory organisation. The authorisation conditions are set out in the Financial Institutions Act (FinIA).^[14]

Regulatory rules and conduct guidance

CIMA distinguishes binding rules from guidance: its rules establish minimum requirements that regulated persons must comply with when providing company management and trust business, while its guidance sets minimum expectations for market conduct and is neither prescriptive nor exhaustive.^[15]

Under CIMA guidance, holders of Trust, Restricted Trust and Nominee Trust Licences conducting trust business are expected to treat beneficiaries' or purposes' interests as paramount and to act impartially between beneficiaries, subject to the trust terms and their legal obligations.^[15]

Management and asset separation

CIMA requires trust companies to demonstrate that they are controlled and managed by fit and proper persons; relevant circumstances include honesty and integrity as well as reputation.^[16]

CIMA requires at least two active directors and may require additional directors on a case-by-case basis. Changes in directors and officers, as well as managers, require the Authority's approval.^[16]

Licensed trust companies must maintain proper arrangements to account for assets and other valuables received as trustee and keep them separate from the trust company's own assets and liabilities.^[16]

Financial resources

A Singapore-incorporated licensed trust company must maintain a net asset value of at least one-quarter of its relevant annual expenditure for the immediately preceding financial year or three-quarters of the minimum paid-up capital of S$250,000, whichever amount is higher.^[17]

Questions and answers

Does every trust company need a licence?

Licensing rules vary by jurisdiction and category. Nevada generally requires a retail trust company to be licensed, Singapore's Trust Companies Act governs licensing and regulation, and Guernsey provides an exemption route for certain private trustee vehicles.^[3]^[12]

Can a family trust company act as trustee?

Private trust companies may be established to act as trustees of family trusts. Whether a particular entity needs a licence or meets an exemption depends on the rules and conditions in its jurisdiction.^[12]

What is the difference between a private and a professional trust company?

A private trust company is an entity established for a family or connected trust structure. A professional trust company provides trustee services as part of its business, with its activity addressed by the relevant licensing or registration framework.^[8]

Who qualifies as a trustee in Mauritius?

Mauritius trust law requires every trust to have at least one qualified trustee. It defines that category as a licensed management company or another Mauritius resident authorized by the Financial Services Commission to provide trusteeship services.^[11]

What does Jersey registration mean for a trust company?

The Jersey Code applies to persons registered by the Jersey Financial Services Commission to carry on trust company business. It sets out principles and requirements that apply to those registered persons.^[2]

Related glossary terms

Reporting financial institution: The Common Reporting Standard classifies a financial institution as reporting when it falls within the relevant jurisdiction's rules and is not non-reporting.
Recognition of a trust: The Hague Convention describes recognition of a trust, its minimum legal effects, and limits tied to applicable law. Jersey law also addresses recognition.