What is a trustee bank account.
A trust account may be referred to as an account opened by one or more persons, which to the bank’s direct or indirect knowledge is being operated by trustees or persons acting in some other fiduciary capacity.
The bank knowledge of the trust account may be;
- Direct: This will occur when the account is opened as a trustee or trustee bank account.
- Indirect: Where the account heading gives clue to that, like A Charles club account.
- By operation of the law: As we said before, executor/administrators may become trustees if a trust arises out of the deceased estate that is when there is the residue after payment of creditors and other charges.
Open a trustee bank account
Before going ahead to open a trustee bank account, a mandate of the account must be signed by all the persons holding themselves out as trustee unless the trust deed states the contrary.
The bank has no need to sight the trust deed unless the trustees or the trustee bank account require to borrow.
Trustees breach of trust
If a trust knowingly or unknowingly misapplies trust property, he commits a breach of trust for which he is liable to the beneficiaries.
A banker will be held liable for breach of trust if it intentionally or negligently facilitates a breach of trust by trustees.
For a bank to incur liability, there must have been a breach of trust to which the banker is aware or ought to have known. The banker should not be a party to breach of trust and it should not also benefit from it.
In the absence of being aware of a breach, the banker will avoid liability.
A banker’s primary responsibility is to his customer and having credited his account with his deposit entertain no claims in respect of the account money or dishonor cheques to on the account based on the claim unless it is supported by injunction.
Delegation Of Authority on trustee bank account
A trustee bank account or a trustee cannot legally delegate his authority to others or fellow trustees except to an agent like solicitors, stockbrokers, bankers, etc when it is necessary for the administration of the trust.
However, such delegation will not involve the power to sign on the trust account.
Corporate bodies just like individuals can act as trustees.
Borrowing By Trustees
Trustees have no implied power to borrow, and therefore authority to borrow must be expressly stated in the trust instrument.
This is also applicable to changing of trust assets as security for the facility.
Death Of A Trustee
Unless on the sole or last surviving trustee, the remaining trustees will continue with the account.
The account will however be stopped if it is wished to retain the right of recovery against the deceased trustee bank account or estate and prevent the rule in Clayton’s case from operating against the bank.