Trust vs. Trust Company in Florida: Know the Difference Before You Name a Fiduciary

What is the difference between a trust and a trust company? A trust is a legal arrangement that holds property for the people you name. A trust company is a business that can be named to act as trustee.

The two terms get mixed up because a trust company often appears inside a trust document. This guide explains each term in plain words. Trust Counsel, PL is a Coral Gables, Florida law firm that advises and represents trustees, personal representatives and beneficiaries.

The short answer: a trust is an arrangement, a trust company is a business

A trust is a set of written terms under which a trustee holds property for beneficiaries. A trust company is a separate business, formed under state law, that can serve in that trustee role.

Florida law uses plain labels for the people involved. The person who creates the trust is the settlor, sometimes called the grantor. § 736.0103 defines a settlor as a person who creates or contributes property to a trust. The same section covers a person with a present or future beneficial interest in the trust, and also a person holding a power of appointment over trust property in a capacity other than trustee.

The confusion starts when a trust company’s name shows up in a parent’s plan. Readers assume the trust is the company. It isn’t. The company can be the trustee, and the trust is the arrangement it manages. The Florida Office of Financial Regulation draws a line between family trust companies and non-deposit trust companies.

What a trust is, and why it is not a legal entity

A trust is a relationship over property, not a company with owners and an office. It works through its trustee.

Florida law recognizes three ways to create one. A trust can be made by transferring property to a trustee during the settlor’s life or by will, by declaring that an owner holds identifiable property as trustee, or by exercising a power of appointment in favor of a trustee. § 736.0401 lists those methods.

The trustee holds the property and carries the duties. Once a trustee accepts the role, the trustee must administer the trust in good faith, in accordance with its terms and purposes, the interests of the beneficiaries, and the Florida Trust Code. § 736.0801 states that duty. § 736.0802 adds that the trustee must act solely in the beneficiaries’ interests.

Control depends on the trust’s terms. For trusts created under instruments executed after the Florida Trust Code’s effective date, the settlor may revoke or amend the trust unless its terms expressly make it irrevocable, as provided in Fla. Stat. 736.0602(1); trusts created under earlier instruments follow different rules. § 736.0602 gives that rule. The trust document is the place to look for how the settlor’s control is described.

What a trust company is, and how it fits into a trust

A trust company is a business that can be named to act as trustee. It is an organization, so it does not die, retire or move away the way a person can.

The Florida Office of Financial Regulation describes non-deposit trust companies as entities that provide trustee and estate administration services.

Florida law also lets some trust companies act as personal representatives. § 733.305 says trust companies incorporated under Florida law, and certain banks authorized to exercise fiduciary powers in Florida, are entitled to act as personal representatives. A personal representative (often called an executor) handles a probate estate.

A trust company’s role still follows the trust document. Naming a company does not change the trust’s terms or the trustee’s duties. For how professional trustees are used in Florida estate plans, see our professional trustee services page.

Trust compared with trust company, side by side

A trust is the arrangement, and a trust company is one possible trustee for it. Here is how the two differ.

• What it is: A trust is a set of terms and property. A trust company is a business with owners and management.
• Who acts: The trustee named in the trust terms acts for the trust. A trust company can be that trustee.
• Continuity: The trust continues under its terms. A trust company continues as an organization when people change.
• Accounting: Under § 736.0813, a qualified beneficiary of an irrevocable trust is generally entitled to an annual accounting from the trustee, unless the beneficiary waives it, and the trustee must also account on termination and on a change of trustee.
• Names: A company with “trust” in its name is not automatically a trust. The trustee clause shows who holds the role.

Is a trust the same thing as an LLC, and can a business go into a trust?

No. An LLC and a trust are different legal tools, and a business owner may use one, the other, or both.

An LLC is a business entity formed under state law, with members and a management structure. A trust is an arrangement that holds property for beneficiaries under written terms. A trust can hold property an owner wants passed on in a set way, including ownership interests in a business.

That creates real planning questions. Who takes over the owner’s interest if the owner dies or can’t act? Does the trust give a trustee power to vote or sell? The answers come from the trust terms, the company’s governing papers and any lender requirements. Whether a business belongs in a trust depends on the facts, including ownership structure and tax goals.

This planning falls under business succession planning. Trust Counsel, PL also handles estate tax planning for business owners and families.

Trust versus will, and who can serve as trustee

A will generally works through probate, while a trust is run under its own written terms.

A will takes effect at death and usually goes through probate, the court process that handles the estate. The ACTEC probate video explains that process. In Florida, a personal representative (often called an executor) carries out that process.

A trust can hold property during the settlor’s life and continue after death or incapacity. ACTEC’s children’s trust video notes that clearly stated settlor wishes in the document matter.

Trustee choices include a family member, a professional trustee such as a trust company, or an attorney. Trust Counsel’s attorneys can serve individually as trustee or personal representative. The firm advises and represents trustees, personal representatives and beneficiaries.

When a trusteeship must be filled, the trust terms come first. Under § 736.0704, for a noncharitable trust, a vacancy in the trusteeship is filled first by the successor the trust names, then by a person the qualified beneficiaries choose unanimously, and then by a person the court appoints; charitable trusts follow a different order. A beneficiary can ask a court to remove a trustee. § 736.0706 lists grounds such as a serious breach of trust. If a trustee won’t provide information, see our page on what to do when a trustee refuses an accounting.

We serve clients in Aventura. Trust Counsel’s only office is in Coral Gables, and we serve clients in Aventura; families there can review professional trustee and personal representative services.

Talking through a trust document you’ve been asked to read

Start with the trust document itself. You may be reading this because a parent’s plan names a trust company, or because someone asked you to accept a trustee role.

Trustee decisions affect property and family members for years. Reading the trustee clause, the settlor’s instructions and the accounting duties is the first step.

Quick answers

What is the difference between a trust and a trust company? A trust is the arrangement that holds property under written terms. A trust company is a business that can serve as trustee.

Can an attorney serve as trustee? Yes. Trust Counsel’s attorneys can serve individually as trustee or personal representative.

Must a trustee give an accounting? An irrevocable trust’s trustee generally owes each qualified beneficiary an annual accounting, unless that beneficiary waives it.

If a trust document or trustee nomination has you unsure what it means, you don’t have to work through it alone. Call (305) 707-7126 or schedule online to talk it through with Trust Counsel, PL in Coral Gables. The first consultation is free, confidential and carries no obligation to continue.