What is the difference between a trust bank account and a trust account?
Let’s deal with the easy one first.
A trust bank account is an ordinary bank account that the trustees of a trust must, in accordance with the Trust Property Control Act, open if they receive money on behalf of the trust. The first (and often only) money they receive will usually be the R100 donation that a badly drafted trust deed (i.e. the vast majority of trust deeds) claims that the founder made in order to form the trust. The money must be deposited into the trust bank account and will be used up in bank charges within a month or so. Not good!
A trust account, on the other hand is a very special type of bank account, which may only be operated by an attorney, an estate agent or a registered debt collector. These accounts must hold the monies owned by others and may not be used to hold money belonging to the relevant practitioner. In the event of the sequestration or death of the practitioner, the money in the trust account will not form part of that practitioner’s estate as it does not belong to him/her. The banks have a special type of account which is specific for this purpose, and consists of a series of sub-accounts, one for each of the practitioner’s depositors. However, those special accounts may not be opened by debt collectors.
Interestingly, the drafters of the Trust Property Control Act do not appear to understand this distinction as they incorrectly refer to a trust account when they mean a bank account for the trust.
12 comments
Reply
Hi, I recently had a trust created which has even registered and I have the letters of authority. I have not opened a bank account yet. Please can we set up a call to discuss?
Hi Dean,
That’s easy. Here’s my diary https://harbourassociates.youcanbook.me/ Meetings are never charged. Don’t do anything more until you have spoken to me.
I have a property to secure for the future of my children and i was advised to open a trust account. Will the properties in this account form part of properties when i pass on or in dissolution of our marriage?
Which bank is best suited for this purpose
Regards
0685852633
Hi Jerry, There’s a lot you need to know before you move forward. Can I suggest that you book a Zoom or Google meeting with me? You will find my diary here https://harbourassociates.youcanbook.me/
There’s never a charge for meetings.
Can tracing Agent Open such account for money to be deposited in that account to be distributed to clients accordingly…
Hi Brian,
I don’t know the answer to that one. I would think the answer is Yes if a tracing agent is deemed to be a debt collector. Do you have to register with a professional body? If so then I would think you should ask them.
May a managing agent of complexes deposits money collected from owners as levies into such a bank account with sub accounts to manage the administration funds of a certain number of body corporates
Hi Callie,
To my knowledge, only Attorneys, Estate Agents and Debt Collectors can open a trust account. What distinguishes it from a normal bank account is that if the person who opened it is bankrupted or dies, the money in the trust account does not form part of their estate.
If you hold other peoples’ money in any other account, it forms part of your estate.
Also, you have to be careful that you do not contravene the Banks Act by acting as a banker. I can’t guide you here, but many years ago, SAICA told us CA(SA)s that we had to stop lumping various clients’ monetary investments together in order to earn them a better interest rate.
We have a house on a trust from our father , now the occupants are required to pay rent even though we pay our own water and electricity for the parts we occupy do we deposit the money into the main trustees account as I feel that we will not have access to who is paying rent as this has happened before all the new rules are coming from the main trustee who doesn’t live on the property. is it fair for the each of us to deposit money into his account instead of a bank account that is opened under the trust name so it will have records of amount paid and what the money is used for .
Hi Candice,
Your question seems to imply deeper issues than simply into which account you should pay the water and electricity. However, my view on the services question –
If the main trustee is being charged by the Municipality for these services in his own name, then you should reimburse him. You can reasonably request a copy of the Municipal account each month.
If the trust is being charged by the Municipality, then it should pay the charges and you should reimburse the trust.
Hi ,
My Son , who was born in South Africa and is now 22 years old , applied for nationality to the Ministry of home affairs , through a lawyer ..
In fact , he can’t open a bank account for now as he only has his birth certificate .
What can he do to have his cash kept in a bank , through a trust account , pending the result of his application for citizenship .?
Thanks
Someone with a South African ID would have to open the bank account and be one of the trustees. Can that be arranged? I suggest we correspond by email derek@harbourassociates.co.za or via a Zoom or Google Meet meeting https://harbourassociates.youcanbook.me/