A trust company is one that administers the financial dealings for another entity, such as an individual or a corporation. In the vast majority of cases a trust company is a bank, though quite a few law firms also act as trust companies. These companies provide a number of fiduciary responsibilities.
A trust company handles most of these tasks through the services of a trustee. This trustee can oversee a number of important functions and handle a wide range of financial situations. Those include everything from the mundane, such as paying bills, to handling multi-million dollar investment decisions.
For many people, the first thing that comes to mind when they think of a trust company is the administration of an estate, especially as the executor of a will. A trust company is especially useful in this regard simply because it takes the task away from a family member who has enough to consider during such a difficult time.
A trust company also handles the financial assets of an irrevocable trust, usually used to handle charitable donations or sizable inheritances. The owner of the assets gives up all rights to those assets and it is managed for a beneficiary. Usually in such a situation, money is invested in stocks, bonds and CDs, and earnings are distributed to an individual, group or organization. However, the original investment is never touched so that it keeps earning money in perpetuity.
Corporate trust services are different in a number of ways. Unlike individuals, where trust companies mainly handle assets, corporate trust services often deal with handling debt. They administer bond payments and monitor the company to ensure there are no problems.
In some cases, a trust company may feel it does not have the expertise, staff or time to handle every aspect of a trust. In those cases, it may seek out other partnerships. This is known as an ancillary trusteeship.
Ancillary trusteeships can also be created when an individual wants to handle some of his or her own assets. Working together in a partnership with a trust company is one way to get this accomplished. It gives an individual some flexibility to handle areas within his or her comfort level, while leaving the rest to a professional who knows the marketplace.