Corporate trustee

Corporate trustee
See also

Corporate trustee is a trustee that is incorporated as a company (and made up of directors), and performs the same role as an individual trustee, but collectively [1].

Trustee is a synonym for anyone in a position of trust and so can refer to any person who holds property, authority, or a position of trust or responsibility to transfer the title of ownership to the person named as the new owner, in a trust instrument, called a beneficiary. A trustee can also refer to a person who is allowed to do certain tasks but not able to gain income, although that is untrue [2].

Corporate vs. individual trustee

According to Dixon D. there are both advantages and disadvantages to having either individuals or a company act as trustee. When it comes to fees, individuals trustees will initially be the cheaper option. With a corporate trustee you will face an additional cost to set up the company. You will also incur an annual review fee. Despite the higher upfront cost and ongoing reporting requirements, a corporate trustee is likely to save you money in the future by simplifying your fund's administration. For example, if your fund has individual trustees, every time a member comes or goes, you will need to vary the fund's trust dead. The corporate trustee structure also offers a great administrative advantage [3].

Choosing a corporate trustee

Power T. recommends that if you choose to have a corporate trustee then you must ensure that your trust deed allows for a corporate trustee. You must also set up the trustee company before you can execute your trust deed [4].

Follow the steps below [5]:

  • Appoint the trustee
  • Admit members
  • Sign the trustee declaration
  • Open a bank account
  • Establish accounting and administrative procedures

Resignation of trustee

As stated in Special Needs Trusts Handbook if corporate trustee becomes unwilling to continue to serve as corporate trustee hereunder and wishes to resign, corporate trustee shall give notice of its resignation to Trust Protector. The resigning Corporate Trustee shall provide a full final accounting on all trust transactions since the last full accounting and a complete asset list to Trust Protector at or within sixty days after the date Corporate Trustee gives notice of resignation to Trust Protector.

Trust Protector shall be responsible for designating a substitute Corporate Trustee within sixty days from the date of receipt of the notice of resignation. Thereafter Corporate Trustee shall have one hundred twenty days after the appointment of a Successor Trustee to effect a full and final transfer of all assets of the Trust to the substitute Corporate Trustee.

If the Trust Protector fails to appoint a Success Trustee within sixty days, then the resigning Corporate Trustee may file an action in a court of competent jurisdiction for the appointment of a Successor Trustee [6].

References

Footnotes

  1. Power T. 2019 p. 108 (DIY Super For Dummies)
  2. Black's Law Dictionary, Fifth Edition 1979 p. 1357
  3. Dixon D. 2012 (Securing Your Superannuation Future: How to Start and Run a Self Managed Super Fund)
  4. Power T. 2015 p. 107 (DIY Super For Dummies)
  5. Power T. 2015 p. 107 (DIY Super For Dummies)
  6. Hook A., Dudek P., 2019 p. 96 (Special Needs Trusts Handbook)

Author: Paulina Wolnik