All trust accounts are now subjected to yearly audits under the newly gazetted Estate Administrators Act of November 21, 2017. This was done to ensure depositors’ money is not misused or abused by the trustees.
A trust account is an account in which a bank or trust company (acting as an authorised custodian) holds funds for specific purposes such as to pay property taxes and/or insurance premiums associated with a mortgaged property.
Over the years, though the trust accounts were run and maintained by registered persons, it was only in principle as some unregistered people also executed the duties. However, with the new law in place every trust account can be administered by registered people only.
Part of the Estate Administration Act reads; “A registered person shall, at least once in every year, cause his trust account and books of that account kept in terms of paragraph (b) of section thirty-three to be examined by an auditor who is registered in terms of the Public Accountants and Auditors Act [Chapter 27:12].
“And shall at such time or times as may be prescribed submit to the Council a report from such auditor in the prescribed form relating to his trust account.”
A trustee, which is always a registered person, is expected to open and keep a separate trust account at a bank registered in terms of the Banking Act [Chapter 24:01] in which he shall, within six days of receiving them, deposit all moneys held or received by him on account of any person in the course of his business as an estate administrator.
Failure to do so he or she may be investigated into. Provided that, in addition to any trust account a registered person may open and keep a trust account bearing interest at a bank or building society or with an institution approved by the Council for the purposes of this proviso in which he may, unless otherwise instructed by the person.
Proper books of account containing particulars and information as to moneys received, held or paid by him for or on account of any person and as to any interest earned by moneys in an account, which are payable to any such person.
The Council may at its own expense appoint an auditor registered in terms of the Public Accountants and Auditors Act [Chapter 27:12] to inspect, at any time it thinks fit, the books of account of any registered person in order to ascertain that the requirements of this Part and any relevant rules are being observed.
Such auditor shall report to the Council in such general terms as not to disclose confidential information entrusted to the person whose books of account he has inspected.
If it is found from an inspection by an auditor appointed in terms of this subsection that the registered person has not complied with any provision of any relevant rules, the Council shall be entitled to recover the cost of the inspection from that person. Under the law trust account moneys are excluded from insolvency or attachment.
An amount standing to the credit of a trust account kept by a registered person in terms of this shall not be regarded as forming part of his assets on his death or insolvency or on the assignment of his estate.
On control of operation of trust account, upon application made by the Council and upon good cause being shown, the High Court or a judge in chambers may prohibit a registered person from operating in any way on his trust account and may appoint a curator bonis to control and administer the trust account with such rights, duties and powers in relation thereto as the High Court or judge, as the case may be, may think fit.
Upon the death or insolvency of a registered person the Master of the High Court may, upon application made by the Council or by any person having an interest in the trust account of such person, appoint a curator bonis to control and administer such trust.
A bank at which a person keeps a trust account in terms of section thirty-three shall not, by reason only of the name or style by which the account is distinguished, be deemed to have knowledge that that person is not entitled absolutely to all moneys paid or credited to the said account.
Any person who shall be guilty of an offence of misusing the trust accounts are liable to a fine or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.–herald