Banks, insurance companies, brokerage firms, and financial planning firms are all vying for a piece of your portfolio. As a result, consumers often find their assets scattered among these institutions. One solution to this problem is a trust company, which can provide a variety of investment, tax, and estate planning services for clients. This article will provide a high-level overview of the nature and function of trust companies, as well as the services they offer.

What Is a Trust Company?

By definition, a trust company is a separate corporate entity owned by a bank or other financial institution, law firm, or independent partnership. Its function is to manage trusts, trust funds, and estates for individuals, businesses, and other entities. A trust is an arrangement that allows a third party or trustee to hold assets or property for a beneficiary or beneficiaries.

Trust companies get their title from the fact that they act in a fiduciary capacity for their clients—as trustees. A fiduciary is an organization or an individual with the responsibility to act on behalf of others to manage their assets. 

The majority of a trust company’s assets are held in actual trusts, with the trust company named as the trustee. Trust companies generally employ several types of financial professionals, including financial planners, attorneys, portfolio managers, CPAs, and other tax professionals, trust officers, real estate experts, and administrative personnel.

KEY TAKEAWAYS

  • A trust company is a separate corporate entity owned by a bank or other financial institution, law firm, or independent partnership.
  • A trust is an arrangement that allows a third party or trustee to hold assets or property for a beneficiary or beneficiaries.
  • A trust company manages trusts, trust funds, and estates for individuals, businesses, and other entities.
  • Trust companies perform a wide range of services related to investment and asset management as well as safekeeping services.