This article addresses the operational requirements of an innovative estate planning tool, an Ohio licensed family trust company. Even if launching an unlicensed family trust company, it is considered “best practice” to implement at least some of these operational requirements for fiduciary protection and situs nexus.
Before discussing the key operational requirements of operating a licensed FTC in Ohio, it is helpful to first discuss the importance of conducting pre-formation due diligence. Steps to take during the due diligence period include reviewing any applicable trust documents for successor trustee procedures, any limitations to corporate trustees (i.e. capital or asset under management requirements) and the beneficiary relationships to the proposed Designated Relative. To the extent not included in the aforementioned documents, language restricting the transfer of shares of the family-owned company should be considered as well as administrative terms addressing trustee removal, waiver of the duty to diversify family business asset, trust termination provisions and precatory language to guide the FTC as to the Grantor’s distribution intentions. Lastly, clear communication and education with family members regarding the forthcoming formation of the FTC is vital to a successful transition. This can be done in various ways including, but not limited to, family meetings, utilizing a task force, newsletters, educational videos and individual shareholder meetings.
Now to the nuts and bolts of operating a licensed FTC in Ohio. As promised in our last edition, here is a list of the key requirements of a licensed Ohio FTC
Some additional statutory highlights of the Ohio Family Trust Company Act to keep in mind are the following:
Once your FTC is officially licensed and operating there are several ongoing operational considerations that should be highlighted as well. Possibly of utmost importance is the need for documentation of all FTC activities and decisions. For example, thorough minutes, all investment decisions, distribution decisions and policy decisions should be documented in writing. Simply put, document, document, document!« Back to Blog