The trust company is a comparatively new type of banking institution and its functions are not yet clearly defined. The earliest trust companies were organized to carry on life, fidelity and title insurance and the granting of annuities, but their primary function has been to act as incorporated trustees, accepting and executing trusts of various kinds. In this capacity they serve as executors and administrators of estates, as custodians of funds or properties held in trust, and as guardians of minors. Prior to the Civil War the trust company attracted very little attention, but since that time, particularly since about 1875, the increase in the number and the variety of functions performed by trust companies has been marked. In connection with their duties as trustees these companies have secured from the legislatures additional powers authorizing them to carry on other more or less closely related lines of business, until now they undertake such a great variety of functions that they have been aptly called the "department stores of finance."

While it is not possible to draw a sharp line of division between the function of the trust company and that of the commercial bank, it may be said that the commercial bank deals in eredit and handles active funds, thus aiding in the creation of wealth, while the trust company deals in capital and handles funds that are principally inactive, thus conserving existing wealth. More and more, however, trust companies have assumed the functions of the commercial bank as well as those of the savings bank and have engaged in a great variety of financial activities. Many trust companies, including some of the most influential, have adhered to their original and essential function of acting as trustees; others make banking their main business; and still others specialize on the financial side. The general tendency in recent years seems to have been toward an expansion of their activities so as to include many or all of these functions.

In many trust companies the different kinds of work or activities are carried on by departments, as, for example, the trust, banking, bond and safe deposit departments. Some of these departments may be subdivided; thus, the banking department may be divided into savings bank and commercial departments; and the larger companies may have various other departments and divisions, such as mortgage, investment, transfer, real estate, title insurance and fidelity insurance. Generally where trust companies carry on both a trust and a banking business, the two departments are kept separate, each having its own records, clerks and handling of funds.