Trust and Corporate Trustee Bank accounts

The corporate trustee runs a bank account "as trustee for" the trust.

You would open a bank account in the name of:

"Your_Trustee_Name Pty Ltd As Trustee For Your_Trust_Name"

eg: "Sim Holdings P/L ATF Sim Trust No. 6"

The trustee company doesn't generally need its own accounts (separate to the trust accounts), unless it is also a trading company, which isn't recommended.

You should really ask your accountant for info on how to set all this up ... it's important to get it right.

I use a NAB business cheque account and all my trust transactions go through that one account.

 

You need to understand that a trust isn't a separate entity ... it is what's called a "legal fiction" (it only exists in the minds of lawyers ).

A trust requires a trustee to operate things on its behalf. This is usually either a company or an individual - in your case, you are looking at using a company for the trustee (which is what I do).

The trustee company is effectively just a shell company which does nothing more than act as a trustee. It holds no assets, it does not trade, and most importantly, it does not put itself at risk (if it did, the assets it looks after may also be at risk). As such, because the trustee company does nothing, it doesn't need its own bank account (beyond that which it operates in its capacity as trustee).

The trust doesn't have a bank account - the trust doesn't exist. The trustee has a bank account which it operates "in trust" for the beneficiaries.

It takes a bit to get your head around ... but remember, the trustee does all the work but doesn't own anything itself - the trust does. The trust doesn't exist, so it can't do anything without the trustee - hence, the trust doesn't actually do anything.

Come tax time you will get a tax return for the trust (!!!), and a set of financial reports for the trustee company (which don't say anything, since it didn't actually do anything). Just to confuse things more

It might help to think about it this way: trusts are only about ownership ... a trust is used to designate who the beneficiaries of an asset is. The trustee company holds the assets in trust for those beneficiaries. In most situations you only deal with the trustee company - except when buying assets, at which time you designate that the asset is held in trust by the trustee company.

Of course, there is nothing stopping you from having the trustee company do it's own thing like a normal company would ... including running a business or owning assets, but it's strongly not recommended ... the trustee company should do nothing more than run the trust.

(PS. none of this is advice - I am not a solicitor or accountant, this is just my understanding based on what I've learned from my own accountants).

Bank accounts don't matter that much in the grand scheme of things ... I suggest you choose a company which gives good customer service.

I guess there is merit in using the same bank as your margin lender, but it may not necessarily help ... depends on how the bank accounts and margin accounts are run.

Cheque book and internet access is all I have ... you wouldn't need an ATM card unless you would be making cash transactions directly from the trust - which I don't recommend (paper trail is important).

Cash transactions and credit card transactions I do all myself and then submit an expense claim to my trust regularly to have it reimburse me for the expenses I've paid on its behalf.

 

Expenses: accounting fees, property fees that aren't paid by property manager (insurance etc), travel costs to inspect properties, postage and phone calls for managing trust assets, land tax, software to manage trust finances, etc.

An ATM card for the trust is fine if used just for EFTPOS ... just so long as there is a clearly identifiable trail for what the money was used for - so that it is clear it was not personal use of the trust's money. If you are legitimately drawing money out of the trust for personal use, I suggest you transfer it directly to your personal account first and then take the cash from there.

A credit card run by the trust is okay (could even be a personal card that is only ever used for trust transactions), but as a rule, I strive to minimise the number of credit cards I hold for loan servicability reasons.

If doing stuff on a personal card, just document the expenses like you would if submitting an expense claim at work.

I use Quicken for tracking my personal finances and Quickbooks for my trust finances ... so expenses like this are tracked in both - which does require entering the data twice, but gives a very clear indication of which expenses are which.

 

I've used Quicken for over 10 years to manage my personal finances ... it's simple and it works.

However, the trust has certain bookkeeping requirements that are best served by an accounting package like Quickbooks (or MYOB) ... and it's much easier to just send the whole file to my accountant come tax time.

If I was starting again, I would consider using Quickbooks for my personal finances as well - but I still think that Quicken is the better choice, it has a lot of features designed for tracking personal finances that aren't in Quickbooks, and has had a lot of usability work done to it in recent years.

Depends on how complicated your finances are ... you may just get away with using a spreadsheet !!

 

I use the terms MYOB and Quickbooks interchangably ... they do very much the same job. It really comes down to personal preference (and to a degree - what you accountant would prefer, which in 90% of cases I'll bet would be MYOB )