A trust company specializes in the management of assets (such as land or buildings). It is usually held by a bank, but law firms and brokerage firms offer services according to their specializations (management of an estate or managing a stock portfolio).
In some countries, entity can offer significant tax advantages, including in the United States. It often has a legal personality, and may be chosen to manage the assets of a foundation or a charity.
In setting up the trust terms can be made to how the assets in the trust are managed, and specifying the beneficiaries. These beneficiaries can be natural persons or legal entity.
Conditions may also be made to the benefits, such as how often and when they are paid. The absolute anonymity of the owner is considered as an advantage of the trusts, this is perfect for the trust to shield assets. The trust also provides opportunities for anonymous ownership of a company or shielding assets from creditors.
The trustee holds property not for itself but acts within the terms of the trust. Although the trustee manages the trust company, he basically has no right to the assets or the resulting revenues, but will be compensated for its services. Alternatively, the trustee can not be held liable for the debt component, unless caused by negligence.
Heritage is deposited in trust, a legal instrument that defines the beneficiaries of management and how to manage it.
Wealth management is left in the hands of a person called a trustee, or board of directors, employed by the trust company. According to the mission of fiduciary, asset management can focus on its preservation, operating capital, and its subsidy for the future.
A trustee (or Board) manages the heritage while maintaining records describing transactions and is accountable to a court for good behavior. The costs incurred can include medical expenses, charitable donations, legal fees, etc.
The trusts also have the ability to serve the interests of other businesses. For example, a company may have difficulty managing their debts due to lack of sufficient expertise. It may appeal to a trust to re-organize its portfolio of bank loans, lines of credit, debentures and bonds. In the case of bankruptcy, a trustee may have a mandate to secure the maximum funds in return for assets.
The custody of securities to the trust company involves the creation of a property trust with the following consequences: the company’s creditors can not attach the trust securities (the principle of the separation).
The actual holders of the securities can always claim them from third parties. And the trust is typical option for those who do not want to appear as a partner in a given companies’ funds.
In the United States, a trust with revocation provides no tax benefit, and foundations, charities and other related establishments make use of the irrevocable trust. This approach has been used successfully for the establishment of foundations by wealthy families, including Ford, Carnegie (who made his fortune in steel) and Arthur Vining Davis (who owned part of Alcoa).