How a Corporate Trust Service Can Serve a Business

Corporate trusts are a smart way for a business to ease specialized aspects of their finances by giving them to an independent trust company to manage. If your company doesn’t have the resources to manage sophisticated transactions, then having a corporate trust service could make or break your bottom line.

What is a Corporate Trust?

A trust is simply a legal agreement in which you transfer assets from one entity (the grantor) to another (the trustee) for third person’s benefit (the beneficiary). The trustee manages the grantor’s assets and distributes them to the beneficiary based on the trust’s terms.

So why create a trust for your business? There are several potential benefits to consider including the following:

  • Wealth management: A trust can manage your business assets and distribute a beneficiary’s income.
  • Tax benefits: Certain trusts offer tax benefits to some companies.
  • Asset protection: A trust can keep your business assets out of a lawsuit or creditor’s reach.
  • Estate planning: You can transfer your business assets to an heir without worrying about probate.

How Corporate Trust Services Work

If you’re seeking corporate trust services, you’ll typically find them at banks and financial legal firms. In a trust agreement, your company is referred to as the beneficiary, and the company acting on its behalf is called the trustee.

Whatever your business needs are, financial planning, portfolio, and asset management are just the beginning. These services usually come complete with financial planners, administrative personnel, certified accountants, investment managers, real estate experts, and attorneys all lending their expertise to managing your finances.

Picking the Right Company for Your Needs

You’ll need to consider several different factors in order to find the right trust company. First and foremost, knowing what services you require will help you research different licensed companies with good reputations. Verify their fee structures and schedule a consultation to get a sense of their communication style and willingness to cater to your concerns. Finally, be sure the company’s approach matches your own financial goals and risk tolerance regarding your business.

How to Open an Account for a Company Trust

Although the precise plan will vary depending on the advice of your financial planner, there are a few universal steps that will apply:

  • Choose your trustee: As mentioned, a trustee manages the assets and will open the bank account. You can choose an individual, a bank, or a similar entity.
  • Draft the document: A trust document outlines the terms of the relationship, including the responsibilities and powers of the trustee and how the assets will be distributed.
  • Fund the trust: You must transfer the assets you want the trustee to manage.
  • Gather your documents: The bank will require the trust document, your business tax number, and other documents as requested.
  • Open the account: With all of the required documents in place, you can finish opening the account for your business trust.

Corporate trusts can serve as valuable tools for your business’ financial needs, including asset protection and wealth management. If you think this might be the right move for your business, be sure to first consult with a trusted financial advisor or attorney to determine the next steps to take.