Trust corporations are businesses or individual professionals that undertake the administration of trusts and estates and also have the power to act as Court of Protection deputy and attorney.
This type of corporation was originally led by banks, or law firms with large private client units. However, newly established businesses within the legal sector are now combining trust corporations with consumer brands in order to provide these legal services. More established firms have increasingly introduced trust corporations following consumer demand.
According to section 68(18) of the Trustee Act 1925, a trust corporation is an individual or business appointed by the court to be a trustee within a case. Alternatively they could be entitled to act as a custodian trustee under section 4 subsection (3) of the Public Trustee Act 1906 legislation.
In order to become a trust corporation, businesses must be a registered constituency under UK or European Commission law. They must also have the power to undertake trust services within England and Wales, with one or more businesses within the UK, and have given a share capital of over £250,000 — over £100,000 of which being given in cash.
Trust corporations may be owned by another company or be run by an LLP. However they must be regarded as a separate legal entity that may have assets within England, Wales and overseas.
There are many differences between law firm trust corporations and those led by banks. Law firm trust corporations are usually formulated as a subsidiary of a parent business that carries out all the legal activity and then charges the corporation. This ensures the corporation can be classed as non-trading, which is a typical characteristic of law firm trust corporations.
This type of corporation also has no direct employees, with the directors acting in partnership with authorisation to act on behalf of the entire corporation. Directors of law firm trust corporations must be a qualified UK solicitor or registered foreign lawyer.
On the other hand, bank trust corporations usually classify themselves as trading and specify charges to consumers for operating the trust. They are mainly part of a banking trading group and have their own dedicated team of employees. This includes directors who solely lead the corporation and separate authorised managers that act on behalf of the corporation.
Trust corporations are an effective way of improving services by streamlining the administration process of estates. However they do require a constitution and registration with the Registrar of Companies, both of which can use up valuable time and money. There must also be a dedicated CLOP and COFA associated with the corporation.
