As a trustee the trust company has many advantages over the individual. In the first place, it usually has superior responsibility. Though an individual executor or administrator gives bonds for the faithful execution of his trust, yet it has often happened that individual trustees have used the funds intrusted to their care for their own advantage or have squandered them in speculation, leaving the widow and the orphan destitute. With the trust company the safety of funds is assured. In most states trust companies are required to keep all trust funds entirely separate from their general assets, and in case of failure such funds cannot be levied upon by the creditors of the company. The trust company is usually subject to examination and supervision by state authorities; it protects its customers by an adequate capital and surplus, and in many states it is required to make a deposit with the state officials to guarantee the faithful discharge of its duties as trustee. Its success depends upon its reputation for fair dealing and fidelity to its trusts. It has frequently been said that there never has been a trust fund impaired by the failure of a trust company having control of the fund.1 Then, too, the trust company has the advantage of perpetuity - it never dies. It has an established office and can always be consulted when needed. The individual trustee may die, or resign, or become incapacitated through ill-health, involving delay, expense and perhaps serious loss in the appointment of another individual trustee.
1Herrick: Trust Companies, p. 34.
In the second place, the trust company is usually more efficient than the individual trustee. The latter, even if competent to carry on the work of a trustee, must make it secondary to his own business. The trust company is organized specifically to carry on this work and has the necessary equipment, experience, and facilities for doing it promptly and efficiently. Its wide experience in the trust business and in trust securities is invaluable to the estate. The trust company is constantly in touch with investment conditions, and the extent of its operations enables it to invest the funds of the estate on better terms than the individual trustee.
Finally, the superior facilities of the trust company often enables it to administer trusts more economically than the individual trustee. The latter must give a bond, the cost of which is charged to the estate, while the trust company's assets and the special deposit with the state protect the trust without extra cost. And, as noted above, the trust company, because of its financial activities and its knowledge of the investment field, is usually in a position to secure a better income for the trust than can the individual. In appointing a trust company as trustee the fees are usually made a part of the contract, so that the expenses may be known in advance. Quite commonly trust companies tender their services in the drawing of wills, keeping them until the death of the testator, and then filing them with the proper court, all without charge in cases where the trust company is appointed executor. In the hands of a personal administrator a trust is often abused, especially in the compensation charged for administering it. The trust company is in the business permanently and it seeks to enhance its reputation and patronage by the efficiency and economy of its services to the public. It is sometimes contended that while the trust company furnishes undoubted security for the funds intrusted to it, and though its position gives it superior opportunities for investment, yet it lacks that personal interest in those for whom it acts which is necessary to obtain the highest return on the funds invested. In answer to this criticism it need only be repeated that the prosperity of the trust company depends upon its reputation for efficient administration and that it will seek to satisfy its clients by securing as large a return upon the funds intrusted to it as is consistent with prudence and safety.
1 Herrick: Trust Companies, p. 47.