General Functions of Trust Companies A trust is something committed to another person's care for use or management and for which an account must be rendered. The original and essential function of a trust company was to accept and handle trusts of a business nature. To execute trusts efficiently, however, the trust company found it expedient to undertake many lines of collateral business, thus adding function after function to its province until today it represents the most inclusive and complete financial institution.
A representative trust company performs the following general functions: i. Banking functions: savings and commercial banking operations. .
2. Trust and agency functions: (a) For individuals: private agreements, probate, in vestment, real estate, and insolvency operations.
(b) For corporations: trustee of mortgages and funds, transfer agent, registrar, corporate reorganiza tion and financing operations.
3. Insurance and safe-deposit functions.
Advantages of Corporate over Individual Trustee A trust company can perform the various functions of trustee better than an individual. As a corporation its existence is not limited, so that it can carry through to the end any trusts com mitted to it, whereas the individual trustee may die or become incompetent, making it necessary to instal another trustee, with incident delay and expense. The convenience of the creator of the trust and the public is enhanced when a trust company acts as trustee rather than an individual, since it has a regular place of business, well known and open every business day. It has all the facilities for executing trusts efficiently—an organization, expert officers, a clerical staff, a legal department, a good bookkeeping and auditing system, safe-deposit vaults, a wide clientele, and so forth. To this work it gives its almost exclusive attention, whereas an individual trustee is prone to make his trust secondary to his own business. Furthermore, the trust company is expert in the law of trusteeships and has had long experience in handling them; its customers who have created trusts with it get the benefit of its legal advice and investment ability, and thus the income from the trust is likely to be higher and the expenses lower; and the trust company is able to make temporary loans to the ad vantage and preservation of the estate. Finally, the trust is much safer in the hands of a company, which executes the estate in an impersonal way, free from the personal prejudices and biases common to individual trustees; which also provides a capital and surplus to protect its customers; and which desires to perpetuate the good-will of the institution. Such influences as these make
for additional security.
Trust Functions for Individuals Trusts undertaken for individuals are of various kinds and arise for numerous reasons. Persons who feel themselves in competent to care for their estates, travelers, absentee property owners, endowed charities or bequests, and others, commit their properties to the care and management of trust companies. Trust companies act as custodians of life insurance policies, collect the proceeds of the poliCies, and pay them as annuities to beneficiaries. In all such trusts the trustee's fees are stated in the trust con tract, and the funds are kept distinct from the trustee's own as sets and are held in the name of the trust company as trustee.
In many states the trust company is empowered by law to act as executor, administrator, trustee, guardian, and con servator. An executor is a person appointed by the terms of a will to take and execute an estate according to the terms of that document. An administrator is a person appointed by the probate court to take and execute according to the inherit ance laws of the state an estate of one who has died intestate.
An "administrator with the will annexed" is a person appointed by the court to take and execute an estate when the deceased did not name an executor in the will, or when the executor named dies, refuses to act, or is incapacitated from acting. The trust com pany may serve in any of these capacities and in doing so take charge of the estate, subject to the supervision of the court, to which, after the final distribution of the estate according to the will or the state inheritance laws, the company makes an itemized report of all receipts and expenditures under the trust. The trust company may be appointed a guardian to care for the estates of minors, or a conservator to care for the estates of insane, idiots, habitual drunkards, spendthrifts, or others incapable of looking after their own affairs. All such duties are carried out under the surveillance of the court, to which also reports are made. The fees may be fixed by law or by the court. State statutes generally permit trust companies to act as depositories for court funds and for others acting as executors and the like.