“A trust company manages trusts, trust funds and estates for individuals, businesses and other entities.”
A trust company can provide a variety of investment, tax and estate planning services for their customers
Wealth Advisor’s recent article, “Understanding How Top Trust Companies Operate,” gives us a high-level overview of the nature and function of trust companies, as well as the services they provide.
A trust company is a separate corporate entity owned by a bank or other financial institution, or by a law firm or independent partnership. It can manage trusts, trust funds and estates for individuals, businesses and other entities. Most trust company's assets are held in actual trusts, with the trust company named as the trustee. They typically use several types of financial professionals, including financial planners, attorneys, portfolio managers, CPAs, and other tax professionals, trust officers, real estate experts and administrative personnel.
Trust companies perform a wide variety of services related to investment and asset management. One of their main tasks is managing the investment portfolios within the trusts of their clients. There’s also a variety of investments, such as individual securities, mutual funds and real estate, that can be employed to achieve growth or income.
Trust companies also can provide safekeeping services within secure vaults for other types of tangible investments or valuables, like jewelry.
Escrow services and holding accounts for proceeds from 1031 exchange real estate transactions can be provided, if necessary. A section 1031 is an Internal Revenue Code rule that allows taxes to be deferred on qualifying assets, such as real estate. They can also provide estate settlement services, such as valuation, dispersion and re-titling of assets, payment of debts, and expenses, estate tax return preparation and the sale of closely held businesses.
Trust companies frequently work with their clients' heirs to provide the same types of services to the estate assets' recipients as to the donor.
They also take full fiduciary responsibility for their clients' financial well-being. This means that the clients' best interests are always considered in each service and transaction performed.
Most clients who want to use a trust company must meet certain financial requirements, usually including a requirement that the client have at least a certain net worth.
Reference: Wealth Advisor (December 10, 2019) “Understanding How Top Trust Companies Operate”