Why Family Trusts Need Their Own Bank Account
Family Trusts and Bank Accounts
Frequently, Trustees have to consider whether they should open a bank account for the Trust. This consideration usually arises when a Family Trust either receives funds or the Trust has to make a payment.
My view is that a bank account should be opened when the need exists for such an account. So, if the Trust is going to receive funds or pay out funds, then a bank account is necessary. Hence, if a Trust hold shares and will be receiving dividends, then those dividends will belong to the Trust and hence should be banked into the Trust’s bank account. Correspondingly, if a Trust is going to incur expenses, such as having to pay for a new roof of the home that it owns, these expenses should be paid out of the Trust’s bank account.
- The reason why I hold this view is that Trustees have two particular duties. The first duty is to ensure monies belonging to the Trust do not get mixed up with Trustees’ funds. Clearly, having a bank account for the Trust where funds are paid in and paid out assists in meeting this duty.
- The second duty is that Trustees must be able to account to Beneficiaries for the administration of the Trust.
Having a separate bank account and keeping copies of all the Trust’s bank statements showing all the transactions undertaken by the Trustees is of enormous help in satisfying this duty. Remember however, those transactions will need to be recorded in Minutes and financial accounts based on the information contained in the Bank statements will need to be completed.
Janet Xuccoa
All the best,
Janet Xuccoa BCom LLB
Trust Director
FamilyTrusts.co.nz
Gilligan Rowe + Associates Ltd
Learn more about Janet
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More Information?
If you have any questions or queries relating to asset protection or trusts you can Request-A-Call for a no-risk chat or to set up an interview. Otherwise just call Janet Xuccoa, Trust Director and Partner of Gilligan Rowe & Associates Limited. Janet can be contacted by emailing janet@familytrusts.co.nz or telephoning (09) 522 7955 .
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