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What is a Trust Company?

In order manage, operate, or eventual transfer of any company/individual or institution, a trust company is incorporated which acts the legal entity fiduciary, trustee or agent for the main company. The role of the trust company is to act as the custodian for trusts, manage estates, ensure arrangements, transfer stocks, registration of ownership and manage assets.

 

Breaking Down ‘Trust Company’

The trust company does not become the owner of the assets assigned by the owner but it may need some authorization or legal obligation to manage the assets on behalf of the parties. Generally, the trust company or the trust department is part of the associated company of a commercial bank. The arrangements of trusts are generally made to manage the profits from the assets on annual basis or on transferring to the third party.

Consumers have a wide range of options in trust companies of different sizes as well as fees. The smaller institutions are better than the companies larger in size with multiple numbers of products and offerings but not the consumer focus. Few of the famous examples of the trust companies are the Northern Trust which is also known as NT and the Bessemer Trust as well as the US Trust. The fees of these trust companies may range from 0.25% to 2.0%, as per the size.

 

Trust Company Services

In addition to the common services like wealth management, trust companies also offer a wide range of not limited to acting as a fiduciary or agent. Trust companies are also involved in activities like bill payments, cheque writing, and other utility services. Some of the trust companies also enable clients with services like brokerage services, investments services, etc. As per the business requirements, the trust companies also offer services to build financial plans with some additional fees. In case the client needs estate management services like guardianship, estate settlement or non-financial asset management then trust companies come handy for such tasks.

 

Who Should Use a Trust Company?

The trust company becomes the agent for their client so almost all the investment decisions are made by the trust company which is in the interest of their clients. Trust company becomes an added support for the individuals who are incapable of making the right decisions or financial planning. Even clients who are not interested in getting directly into the company operations to manage the day-to-day finances are also benefitted by the trust company setup.

Trust companies also offer services to deal with estate management matters. If there are no family members left to take them as the successor trustee then the trust company can act as one. In such scenario, the trust company becomes the new trustee to manage the assets on the demise of the grantor.

Trust companies also become a good alternative in order to prevent any kind of family disputes when it comes to dealing with the estates. In case dividing the assets could result in family issues then the trust company can be the third party.

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