Does a Trust need a bank account?

Only if it is badly drafted (or in very exceptional circumstances)

The first problem is that most drafters of trust deeds (in fact every one that I have ever come across except those who copy from my trust deeds) will declare the intial donation of R100 or rarely, some other cash amount. The Trust Properties Control Act requires that as soon as a trust receives cash, it must open a bank account, so those trusts have to open a bank account just for the R100! Guess how soon the donor finds himself lending more money to the trust just to pay ongoing bank charges!

If you decide to register your trust for tax, SARS wants the banking details, but on the application you can state that the trust has no bank account and then insert an alternative bank account in its place (with the consent of the other account holder), so that gets around that one.

The next problem arises because of the failure of the drafter to fully understand the tax implications of income earned in a trust or simply getting too clever in income splitting - an apparently neat way to minimise tax that sounds great at the seminar but which invariably requires more effort than it is worth. This results in the trust earning income from investments which, unless very carefully handled, is decidedly tax inefficient and, of course, requires the trust to have a bank account.

The third reason why your trust may end up opening a bank account is because the organisation selling it to you is a banking institution. Well, that one's obvious isn't it?

So, if anyone talks about a trust having bank accounts, beware, their tax saving schemes are almost certainly impractical and will never be properly implemented and maintained by you in the long run or maybe they just want the bank charges.


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