Bank account for trust - Is it mandatory?

ianvestor

ianvestor

Hi all,

I got a letter today from Commonwealth bank stating that the fees on some of my business (trust) accounts will go from $5 per month to $10 per month, but that price will include a lot more transactions. The problem is, I don't even use these accounts yet so my costs are effectively doubling.

I'm wondering if these accounts are even necessary yet. The trusts were set up with an initial gift of $10 each, so $10 / month in bank fees is ridiculous if I'm not using them yet (they will be used next time I find another IP or 2).

Is it okay to close the accounts for now and open them again next time I buy (maybe 6 to 12 months from now)?

Also, if no bank account were ever set up for a trust in the first place, what would happen to the initial gift that was entrusted? Is it okay to put it under the mattress?

Thanks,
Ian
 
tubs said:
You may find that if you never cashed the cheque that the trust was never settled.
Click to expand...

What if it was cash, as in a folding plastic $10 note?

Okay let's say I must put this in a bank account to make the trust valid. What institution/account would you recommend for company/trust structures?

If $10/month/trust is as good as it gets now then I guess that's just a cost I'll have to live with.

Thanks,
Ian
 
What does a trust have to do with a bank account?
What does cashing a check have to do with a trust deed?
Why does the $10 have to be stapled to the trust deed?

The trustee holds the settlement for the beneficiaries, what's wrong with "holding" it in his pocket?
Unless the contrary is clearly indicated in the deed.
 
Yep ...

This is the "Trust Property" and if it ceases to exist then the Trust ceases !!!

So, if the cheque goes stale or bounces - end ...

Theoretically, if you bank the cheque and that account goes overdrawn - end ...

What about if you do bank a $10 note ... do you get that same $10 back again years later when you change accounts ???

All this is hypothetical technicalities.

Really, the Trust maintains a separate account because the Trustee should not mingle Trust assets with his own.

Also, if accurate accounts aren't kept then you will not be able to trace and stream certain types of income to different beneficiaries.

Cheers,

Rob
 
If a trust bank account is set up for $10 with the settlement sum and is then charged $10 in bank fees, technically the trust ceases to exist. A physical $10 should be attached to your deed as proof that the trust is in operation. I would not recommend putting the settlement sum in the bank for the reasons Rob G mentioned.

A trust bank account should be set up if you are using the trust. If you aren't using the trust, shutting down the account is ok. There are banks out there that dont charge for you to have a trust account, Id go find some.
 
Thanks everyone, I might seek out a different bank.

However I suspect that finding an account for a trust might be slightly different to finding an account for a trust which has a company as its trustee.

Those accounts which I set up, I actually started them with $100. $10 of each one was the gift, and the rest was my own money, so the accounts are still open (I think there's about $60 or so in each). Does this mean the trusts have been invalidated or can I claim that the initial gift is still intact but my own personal money has been spent on bank fees?

Next time I think I'll just wait until I'm going to use a trust before opening an account for it.
 
No-one has really answered your question though Ian.

I was looking forward to it myself. I also have a Trust account just sitting there wasting $5/month.

I'm awaiting a call from my accountant and will raise it with him, I'll let you know how I go.:)

Regards Jo
 
Thanks Josko, I look forward to hearing about it.

I was actually okay with $5/month, but a double to $10/month is a bit rich.

-Ian
 
You dont have to a bank account for a trust.
You should carfully read your trust deed, over & over until you understand every single line.
 
Hi all

I am a bit confused re the $10.

I have a trust, no $10 in a bank or in my hand, only on paper?

My balance sheet reads $10 Settlement Sum and $10 cash on hand.

I have no idea where this is? My accountant didn't tell me to set an account up with it or staple it or anything.

If anyone asks to see it I guess it's in my purse.......
 
Celeste, who is the settlor for your trust? I think that's the person who is supposed to have given you $10. You should ask them where it is.
 
Piston Broke said:
You dont have to a bank account for a trust.
You should carfully read your trust deed, over & over until you understand every single line.
Click to expand...

Yes, my accountant finally got back to me.

Now, Piston, my first thought was "are you serious?" :confused:

Now I realise you are...and I should!:eek:

Regards Jo
 
Ok,

I have just had a conversation with my accountant, who it seems misunderstood my question. :confused: Long story as to why....

If you have an active Trust, in other words, you are receiving rent from a property owned by the trust...then the rental income needs to be going to the Trust.:mad:

So, in answer to Ian's question, yes. You do need the account if you are using your Trust related to it.

Now I can just see a nightmare of paperwork and wasted time coming up shuffling monies around at the end of the month. Not only will this cost me time, but money as well.

I have three trusts all with property.

I've said it before and I'll say it again, these Trusts are more trouble than they are worth.:(

Regards Jo
 
I'm not really sure about trusts, but I know an issue with companies is that if you don't have a bank account, you can't get a tax refund from the BAS statements. They will keep it in their account until you provide ATO with a valid bank account number, which has to be a business bank account.

Josko, why do you have 3 trusts...... why not just have all the property in the one trust?

Pen
 
The point is that it's not obligatory to have an account.
Of course it is very convenient for transactions, and those that profit from them would like you believe you cant do without it.

Pennyk, is that from experience? I'm gonna research that. Julia may know a bit more also.

Celeste, the trustee of the trust holds the $10 used to settle (start) the trust.
So whoever is the trustee need to hold the $10 at all times. In the trustee's purse, acct or wherever else.
 
pennyk said:
I'm not really sure about trusts, but I know an issue with companies is that if you don't have a bank account, you can't get a tax refund from the BAS statements. They will keep it in their account until you provide ATO with a valid bank account number, which has to be a business bank account.

Josko, why do you have 3 trusts...... why not just have all the property in the one trust?

Pen
Click to expand...

I have 7 properties. Each trust has a Land Tax Exemption Threshold and I also hold them in different trusts for legality issues. (ie. Incase of being sued etc).

I have actually calmed down a little since my last post, having spoken to my accountant at length, finally.

He has assured me I am doing the right thing with all these (damn) trusts - as an accountant would, and tells me I have one of the best structures of all his clients. :eek::eek:

However he also reiterated firmly that a Trust must have a bank account where/when income is being generated, BY LAW.

Regards Jo
 
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