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.