Trusts
Laws pertaining to trusts have evolved from relevant portions of the English law of equity. Today, they are a fixture in most legal systems that have as their root English common law. However, the particulars of trust law vary from one country to another. This article will focus exclusively on trust law as practiced and codified in the United States.What is a Trust?
Essentially, a trust can be defined as a clearly organized relationship between one person or organization who holds the legal title to a property, but is legally bound to exercise that control on behalf of other individuals who hold what is referred to as the equitable title. The former party that exercises control is known as the trustee, while the party benefiting from the other party’s control is known as the beneficiary.
Who Can Be a Trustee?
Individuals can be trustees, as can banks and chartered trust companies. In some cases, an individual can become a “co-trustee” with a bank or other financial institution. While family members usually do not charge fees for their trustee services, banks certainly do so. It should be noted that banks less commonly act as trustees due to rising litigation costs. In addition, trustee services are simply not very profitable when offered by banks. Larger financial institutions are able to generate reasonable profits from trustee service.
What is a Trust Company?
A trust company is a type of financial institution that, as its main purpose, manages trusts, acts as a trustee and also manages estates. In its role as a trustee, a trust company will perform the accounting duties, pay taxes, interact with the courts if needed, keep records and to manage the trust on a daily basis. In its role as an estate manager, a trust company will distribute inheritances to the surviving relatives; see to the payment of probate and other fees from the estate; act to ensure that any provisions the deceased has specified in his or her will are dutifully carried out.
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