Private Trust Company: Definition and How It Works in California

By Eric Ridley, attorney, Ridley Law. Updated October 2026.

A private trust company is a company a family owns and controls to serve as trustee of the family’s own trusts, instead of naming a bank or an individual. It usually has its own board and a separate committee that decides distributions.

How it works in California

Ridley Law’s guide to private trust companies and family offices has more. The estate tax question is whether family members who run the company are treated as holding the trustee’s powers themselves. The IRS took this up in Notice 2008-63, which set out a proposed revenue ruling for a family trust company with a Discretionary Distribution Committee holding exclusive authority over discretionary distributions. In the state statute the notice describes, a committee member can’t take part in decisions for any trust that member or the member’s spouse created or benefits from.

California makes it unlawful to transact trust business in the state except through a corporation organized for that purpose (Fin. Code, § 1005). California also taxes a trust when its fiduciary lives here, and a corporate trustee’s residence is the place where it does the major portion of its administration of the trust (Rev. & Tax. Code, § 17742(b)). A company chartered in another state but run from a family office in California can end up a California fiduciary.

Why it matters

Trusts meant to last for generations need a trustee that outlives any one person. A family company can provide continuity and keep investment decisions, such as holding the family business, inside the family, while a committee of the right people handles distributions.

Common mistakes

Putting a trust’s creator, or the creator’s spouse, on the committee that decides distributions from that trust. Running trust administration from a California office while relying on another state’s charter. And treating the company as a formality, with no minutes, policies or separation between the family office and the trustee.

Related terms

• Dynasty Trust: the long-term trusts a private trust company is usually formed to administer.
• Trustee: the role a private trust company fills in place of a person or bank.
• Trust Protector: another way families keep oversight of a trust without serving as trustee.

Part of the California estate planning glossary. For the full treatment, see Private Trust Companies and Family Offices: A California Guide.