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Abstract HOW THE RICH STAY RICH: USING A FAMILY TRUST COMPANY TO SECURE A FAMILY FORTUNE Iris J. Goodwin Associate Professor, University of Tennessee College of Law This Article is about family trust companies and the role they play in preserving great fortunes. A family trust company is a corporation formed to provide fiduciary services to a related group of people, in contrast to banking institutions established to offer similar services to a larger public. The province of the mega-rich (who remain very much upon the American landscape, the recent economic crisis notwithstanding), these entities have received scant attention from the academic bar. While family trust companies are not new, recent changes in the law in some states have made these entities far easier to create and to operate - much more accessible to wealthy families looking to preserve their fortunes far into the future. To appreciate the significance of the contemporary family trust company, we must not only attend to the particulars of these new rules, but we must also examine this entity in situ, as the very wealthy often employ it - as the centerpiece in a megawatt estate plan, the masterstroke in a series of aggressive planning techniques that potentially secure and indeed grow a fortune to benefit a family for untold generations to come. There is also a normative dimension to the family trust company, however, and to those strategies that would employ it to secure the very wealthy in their fortunes. It has long been a commonplace of democratic theory that, while democracy is largely immune to some degree of material difference within a polity, intransient, radical differences in means are problematic. For this reason, the dissipation of great fortunes has been viewed as salubrious in a democratic polity. For those concerned about the well-being of the American polity, it is then of some moment that, of late, the very wealthy and those who advise them in planning for the inter-generational transfer of assets have focused on the problem of dissipation as the last frontier in the preservation of great fortunes. And the platform that these families are using to redress this problem - their crowning implement -- is the family trust company.
Goodwin, Iris, "HOW THE RICH STAY RICH: USING A FAMILY TRUST COMPANY TO SECURE A FAMILY FORTUNE" (2013). College of Law Faculty Scholarship.