Trust Company

A trust company is a firm, usually associated with a bank or law firm, that manages investments, administers trusts, and settles estates. In these roles a trust company may either act as an agent, trustee, or executor depending on the type of account relationship. One thing that distinguishes a trust company from a brokerage firm is that a trust company assumes a fiduciary responsibility for a trustee, grantor, or decedent's estate.

Because a trust company acts as a fiduciary on behalf of clients they are held to a higher regulatory standard than brokerage or other investment firms. A trust company falls under the jurisdiction of state or federal banking regulators depending on whether or not it is a state-chartered or federally-chartered trust company.

Services offered by a trust company may range from investment management to tax consulting to paying bills or handling the settling of an estate with the courts. Not every trust company offers this full range of services, however. Some specialize in a specific type of account or service. A trust company may also offer common trust funds, an investment vehicle similar to a mutual fund, which allows the commingling of investment funds for the purposes of pooled investment. Common trust funds are only available to trust accounts.

Some reasons why an investor might choose a trust company over a traditional brokerage firm are access to common trust funds, expertise in regards to the administration of estates and trusts, and the expedited and more private settling of an estate that a trust allows.