West Palm Beach Trust Company Violations Lawyer
The recently enacted Florida Family Trust Company Act authorizes what are known as private trust companies. A family trust company (FTC) is similar to a public trust company, except that it serves a limited, defined number of trusts, rather than being open to the public. Because of the diminished need to protect the public at large, FTCs are less intensely regulated and are generally subject to less stringent capitalization requirements.
The law defines an FTC as an entity organized or qualified to do business in the state, as either a limited liability company (LLC) or a corporation, owned solely by family members for whom the company acts as a fiduciary. The Florida Office of Financial Regulation (OFR) oversees FTCs; it is responsible for licensing or registering them, investigating the people who will run the FTC, and periodically examining its operation.
Qualifications of FTC Directors and Managers
Applications to serve as an FTC require background information on the people who will oversee and manage the company. The Office of Financial Regulation is responsible for ensuring that these people have not been convicted of (or pled no contest to) any crimes that reflect on their basic honesty and trustworthiness. This includes:
- Crimes involving fraud, misrepresentation, or moral turpitude fraud.
- Violations of financial institution laws of Florida, any other state, or the federal government.
Other disqualifications include having had their own professional license revoked, or having been involved in the management of any financial institution which had its license revoked, in the 10 years preceding the application.
Typical Services of an FTC
In addition to the obvious service as a trustee that is implied by the very name FTC, these companies may provide an array of other typical fiduciary tasks, including:
- Investment advice
- Personal representative
- Agent for various purposes
- Tax services (planning to minimize taxes, preparation and filing of taxes, etc.)
- Other aspects of wealth management
Activities FTCs Cannot Perform
By the basic terms of the statute, FTCs cannot serve the general public, or any non-family members other than the 35 or fewer employees described above. FTC’s are also specifically prohibited from serving as:
- A commercial bank; it may not itself provide checking accounts, or the like to family members.
- A personal representative in the probate of an estate in Florida.
- An agent pursuant to a durable power of attorney in Florida.
Loss of License
The statute specifies numerous grounds for revoking an FTC’s license including:
- Performing any of the prohibited activities listed above.
- Violation of various transaction laws of Florida, or similar laws of another state or of the federal government.
- Any act that a court determines to be a breach of trust or a breach of fiduciary duty.
- Failing to meet the statute’s definition of an FTC.
Order Removing or Restricting Specific People from Participation
The statute also allows the removal of specific people from participation in the FTC, or restricting their participation in it, on grounds similar to those that support a loss of the FTC license (above). The Office of Financial Regulation initiates the proceeding with a Complaint stating the specific charges and the grounds of those charges. Any FTC facing charges has the right to a hearing to defend against the allegations or proposed sanction.
When You Need Legal Help
FTCs are relatively new in Florida and several legal issues remain uncertain. Chief among them is when an FTC has to register with the Securities Exchange Commission (SEC). There is also uncertainty about the federal tax ramifications of trusts for which the FTC serves as trustee.
West Palm Beach trust litigation attorney Todd A. Zuckerbrod has extensive experience in all aspects of financial matters including with the OFR. He understands the finer points of trusts and the regulations under which they operate. If your family is contemplating creating a Family Trust Company, he can guide you through the process and serve as the trustee if you need one. If you have already created an FTC and are uncertain whether you are complying with the rules governing it, he can review your company and advise what aspects of its operation need to be brought into compliance.
If your FTC faces revocation of a license, or you are a participant who has been notified that the OFR is charging you with activity that could lead to your removal from operation of the company, Todd can defend you effectively and efficiently. For any concerns about your FTC, call Todd A. Zuckerbrod today for a no-fee consultation.