Why a trust should not require its own bank account
I am amazed! I’ve just been reading an article in IOL written by one of their contributors, entitled “Why a trust requires its own bank account”.
She says “Trustees and even service providers justify why separate trust bank accounts are not maintained for trusts”. I am one of those service providers.
Then “Little do they know that it is in fact a legal requirement for each trust to have a separate bank account.” This statement is entirely false. It is only necessary if the trustees receive money. See her next statement.
Followed by “Section 10 of the Trust Property Control Act (the Act) specifically provides that “whenever a person receives money in his/her capacity as trustee, he/she shall deposit such money in a separate trust account at a banking institution…” My italics.
And finally “For a trust to be validly formed, the founder is required to make a donation to the trust. In most cases, the founder stipulates an amount of money as the initial donation.” My italics again.
Huh? It’s the last bit that kills me. Take a look at the donation part of any of the numerous trusts that I have formed – “The donor hereby donates to the trustees a book collection to the value of one hundred rands.”
Step 1 Have your trust deed drafted by someone who thinks for themselves, rather than one who copies what the last person wrote.
Step 2 Make sure your trust is properly structured so that it never receives money (taxable or otherwise).
The mind boggles!