A trust account is an account held in the name of a trustee for the benefit of another person or persons. The trustee is responsible for managing the trust account and ensuring that all monies deposited into it are paid out according to the terms of the trust.
Trust accounts are commonly used in Australia for estate planning, as they allow assets to be distributed to the beneficiaries of the trust without having to go through the legal process of probate. A trust account can also be used to hold money for children until they reach adulthood or manage money on behalf of someone unable to do so themselves.
Types of trust accounts
There are several different types of trust accounts governed by different laws depending on the state or territory in which they are established. In general, a trust account must be established in writing. It must include the name of the trustee, the name of the beneficiary or beneficiaries, and a description of the assets held in the account.
The trustee is responsible for maintaining records of all deposits and withdrawals made from the trust account and must ensure that all payments are made in accordance with the terms of the trust. Suppose there is any money remaining in the trust account at the end of its term. In that case, it must be distributed to the beneficiaries in accordance with the instructions set out in the trust document.
How to open a trust account in Australia
Trust accounts can be opened with a bank or other financial institution. Most institutions offer online banking facilities that allow trustees to manage their accounts from anywhere in the world. It is important to note that banks are not always obliged to accept deposits into trust accounts, so it is advisable to check with the bank before setting up an account.
If you are thinking of establishing a trust account, it is essential to seek legal advice from an experienced estate planning lawyer to ensure that the trust document is correctly drafted and complies with all applicable laws.
Remember, as a trustee, it is your responsibility to understand the rules governing trust accounts in your state or territory and comply with all legislative requirements. Ignorance of the law is no excuse, so please take the time to read up on your local regulations before you create a trust account in Australia.
Tips on how to make your trust account more accountable
As an Australian business owner, it’s important to ensure that your trust account is as transparent as possible. Here are some tips on how to make your trust account more accountable:
- Make sure all transactions are recorded and accounted for. This includes deposits, withdrawals, and other financial activities related to the trust account.
- Keep accurate records of who has access to the trust account and what activities they are authorized to conduct.
- Periodically review all transactions that have taken place in the trust account, and ensure that they are in line with the specific purpose of the account.
- Be proactive in disclosing any information about the trust account to relevant authorities, such as the ATO or ASIC.
- Make sure that the trust account is audited regularly.
Why are trust accounts risky?
Trust accounts can be risky because they can be easily abused. For example, a trustee could use the funds in the account for their own personal benefit, or withdraw money from the account without authorisation from the other beneficiaries. This can lead to costly legal disputes between the beneficiaries and the trustee.
By following these tips, you can help ensure that your trust account is as transparent and accountable as possible. This will help to protect you and your business from any potential legal issues or financial penalties. If you have a trust account and want more information on how to make your trust account more transparent, we advise contacting an experienced and reliable online broker from Saxo Bank.