Generally, a trust company is responsible for the administration, management and eventual transfer of assets to beneficiaries. A trust company acts as the custodian of trusts, estates, custody arrangements, asset management, stock transfer, Gold and Silver IRA Custodians, and registration of real beneficiaries. The trustee is responsible for managing and maintaining the trust's property, while the custodian is only the entity that owns the assets. When you open a trust, you must designate a trustee to oversee the trust's activities, including managing, selling, and distributing the trust's assets to beneficiaries. The assets are in the hands of the custodian, who is a financial institution such as a bank or brokerage firm.
The custodian is limited to administrative services and generally does not have the power to make investment decisions. In a single-employer plan, the employer is the sponsor of the plan that establishes an independent trust to hold the plan's assets. The trust is a separate and distinct entity from the employer. When establishing the trust, the employer hires a trustee and the trustee, if it is a financial institution, normally performs the trust's custody services.
The custodian acts in a capacity similar to that of a trustee with a fiduciary duty to invest and manage assets on behalf of the minor beneficiary until they reach the age of majority. A depositary of a self-directed real estate IRA, such as Equity Trust, allows this type of investment in addition to any type of real estate investment, such as residential real estate, commercial real estate, untreated land and mobile homes, etc. Learn how plan sponsors ensure that employee benefit plans are satisfactory and compliant, and learn how institutional trustees can provide valuable help. You can also choose a professional trustee, such as a trust company, which is a corporation that can act as a trustee and offer solid asset management and brokerage services.
The main distinction is that the custodian is responsible for the custody of the assets of a plan, but is not its owner and therefore cannot buy, sell, transfer or move the assets unless the trustees give him explicit instructions to do so. Given the difference in functions, the knowledge required, the level of responsibility, the fiduciary aspect and the risk taken in assuming and supervising assets, the fees of trustees tend to be higher than the fees of custodians. You may encounter trustees and custodians when creating an estate plan, which sets out what happens to your things when you die or are no longer able to go about your business. People misuse the terms trustee and custodian interchangeably, says Andrew Staab, vice president and chief counsel of the U.
A trustee and custodian are also involved in pensions and retirement plans, although the term may be interchangeable for IRA and 401 (k) accounts. A partner with significant experience as an institutional administrator of employee benefit plans can effectively balance legal and regulatory requirements with the needs of plan sponsors and participants. We use first-class fiduciary accounting software with a trading date that provides comprehensive accounting and reporting of tax lots, as well as true segregation of principal cash and income. The trustee or custodian of your 401 (k) or IRA account is usually the plan administrator, ensuring that transactions are conducted in accordance with IRS regulations.
Elissa Suh is an expert in disability insurance and was a senior editor at Policygenius, where she also covered wills, trusts and advance planning. At Fiduciary Trust, we have been bank custodians for more than 130 years, covering events such as the Great Depression, the Great Recession and the two world wars. You deserve a valuable and experienced partner for your employee benefit plan and other comprehensive trust and custody solutions. .