Trust Deed: Importance, Types, and Responsibilities of Trustees

This document provides an overview of trust deeds, including their importance and the types of trusts. It also discusses the responsibilities of trustees and the auditing and security arrangements for trust accounts. The document highlights the legal aspects and legislative requirements of trust management.

Trust Deed

Table of Contents
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REFERENCES................................................................................................................................8

1.
In the case of trust deed, written document is required when land is involved in
transaction according to the section of 53 (1) of Property Law Act, 1958. Hence, under such
signed document owner declares that one entity will hold the land on trust for others (McLean
and Paull, 2017). On the basis of such aspect trust deed can be created more effectually.
2.
In order to ensure that all the requirements are met higher authority of trust follows
policies and process that are mentioned in Trust Act. In such Act there are several sections
prevail that entails the manner in which trust should carry out its activities (Davenport and
Thompson, 2016).
3.
In the recent times, fraudulent activities in trust increased to a great extent as compared to
the before times. Hence, in the absence of having qualified accountant and lawyer by organizing
audit via third party trust can get information about undesirable practices and aspects (Mees,
2017). This in turn enables trust to undertake strategic action and thereby exert control on
fraudulent activities.
4.
From assessment, it has been identified that section 58-70 contains rules regarding the
accounting for trust money. On the basis of rules and regulations such as section 63 it us highly
required for agents to keep proper accounts. In addition to this, section 64 contains rules
regarding audit requirements. Thus, individual who works as an estate agent is required to submit
an annual audit report according predetermined procedures and aspects (Harrison, 2015).
Further, section 65 of Act provides deeper insight about date on which audited trust accounts will
be verified by director.
5.
Source document may be served as an original statement that includes information about
transactions entered in an accounting system (Crutchfield, Craig and Batrouney, 2015). Hence,
by considering the laws and legislative aspects trust can identify, store as well as retrieve source
documents.
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6.
By taking into account formal written process error will be reported to the higher
authority of trust. Besides this, by doing in-depth investigation of the causes or error
management team would become able to undertake suitable action (Harris, 2016). Further, as per
laws by following the system of authorisation and record process error can be detected and
controlled to a great extent. From assessment, it has been identified that section 154 (1) and 154
(2) is highly associated with making assessment of trust account deficiency and errors. On the
basis of such sections, notification must be e-mailed to chief trust investigator and supervisor. In
this, supervisor is required to advise the reasons for irregularity and evidence where rectifications
are required.
7.
According to ATO, trust may be defined as an obligation which is imposed on other
entity in against to holding of property for offering benefits to beneficiaries. Hence, trust is not a
legal entity but it is considered as taxpayer entity for the motive of tax administration (An
overview of trusts in Australia, 2017). In the case of trust, trustee has accountability to manage all the
tax related affairs and lodge tax returns.
8.
Duties and responsibilities of trustees are enumerated below:
 Effectual maintenance of impartiality ‘
 Trustee is required to exercise reasonable duty of skill and care while performing
activities.
 Further, trustee needs to ensure that payment and transfer of property is made to
entitled persons.
 In addition to this, trustee has accountability to does not make focus on the delegation of
duties. Hence, all the trustees are highly required to attend the meetings held by trust.
This in turn enables them to act in an effectual way or unanimously.
 Trustee also has duty to follow all the rules and regulations mentioned in Property and
Trust law.
 It is the accountability of trustee to maintain proper record of financial aspects and
provide beneficiaries with highly relevant information (Trust accounts, 2016).
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 Standard duty of care and loyalty also must be followed by trustees.
9.
There are different types of trust which have varied features or aspects such as:
 Express trusts: It refers to the one which is created through the intentional declaration of
settlor. Express terms can be distinguished in four other parts such as discretionary,
executed, bare and constituted.
 Non-express trusts: Unlike express trust, non-express trusts are created without having
any intentional declaration and communication. Further, non-express terms can be
divided into types such as implied and constructive.
 Unit trusts: In this, trust lays high level of emphasis on dividing the ownership of trust
property into units. Hence, such trust highly differs from discretionary one because it is
held for unit holder.
 Trading trusts: This trust is highly used for the trust and its beneficiaries which in turn
help in attaining benefits in relation to the taxation aspect (Accounting for trust money -
estate agents, 2016).
 Discretionary trust: Such trusts are created with the motive to manage, protect and pass
family assets more effectually. In this, family assets include shares, personal property and
business.
10.
Fiduciary relationship may be served as a combination of trust and confidence. Hence,
such kind of relationship arises when one person is obliged to act in a good way for the interests
of other entity. In the context of trust, fiduciary relationship arises from two sources such as
agency and relationship of ascendancy. Further, when trustee performs activities for private
benefits then they are considered as breached.
Main features of fiduciary relationship are as follows:
 In fiduciary relationship, existence of trust and confidence in the form beneficiary and
partner is highly required. This in turn enables one individual to influence the decision
making aspect of others.
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 Under this, one person relies on other entity due to having relationship such as trust and
confidence.
Individuals who have fiduciary obligations include beneficiary and executor, company
promoter & firm, director of the company & firm, principal & agent, solicitor & client as well as
guardian & ward. Thus, activities performed by all such entities may result into rise in fiduciary
relationship.
11.
Inter-Vivo trust may be defined as one which is developed for managing certain assets
and offering support to beneficiaries. Such trust is governed on the basis of deed, not on the basis
of will. Hence, under Inter-Vivo trust, assets are managed on the behalf of beneficiaries.
Discretionary trust is the main examples of Inter-Vivo trust which come under the category of
express aspect (Inter-vivos trust, 2017). Hence, such trust implies for the one where interest of
beneficiaries is not determined when it is created.
12.
Specifically, there are mainly three options that can be considered for winding up trust
are as follows:
 By distributing either trust assets or cash to the beneficiaries according to the terms of
instrument trust can be winded up. In this regard, terms of instrument include power of
appointment; accelerate vesting, maintenance as well as advancements.
 Further, by releasing or fulfilling trust obligations one can either trustee, beneficiary or
legal authority wind trust operations (Trusts, 2017).
 In addition to this, by selling concerned property trust can be winded.
13.
There is a significant difference takes place in electronic and manual transaction system.
Moreover, in the case of electronic system by entering data set one can generate receipt or do
transaction within the less time (McLean and Paull, 2017). On the other side, manual system
requires more time and thereby directly affects the effectiveness of transaction.
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14.
With the motive to ensure proper protection of client’s fund trust lays high level of
emphasis on audit and security arrangements or aspects. According to legislation, trust is
required to conduct audit which in turn helps in assessing the deficiency level more effectually
(Family Trusts explained and Family Trust Elections explained, 2017). In addition to this, data
protection Act is also followed by trust for ensuring high level of security and resolving issue
regarding privacy. Thus, by following all such aspects high level of protection can be offered to
the clients.
15.
In accordance with Trust law communication should be clear and precise regarding fund
disbursement. Hence, for the maintenance of high level of accuracy in the accounts trust needs to
follow documentary process in line with the legislative requirements. Besides this, for the
prevention of fraudulent activities audit and security arrangements have made. Thus, by
providing adequate protection for the client confidentiality audit is conducted by the
management team of trust and third party as well (Davenport QC and Thompson, 2016). Hence,
by following protocols and legislative requirements fund is disbursed by the client.
16.
In trust, higher authority makes assessment of P+P system by taking into consideration
the legislative aspects.
17.
Auditing may be defined as a process which in turn lays high level of emphasis on
conducting an official investigation of final accounts. Thus, by verifying accounts in against to
vouchers auditors whether internal or external can make assessment of fraudulent activities.
There is significant difference takes place between internal and external auditing. Moreover, in
the case of internal audit individual from management is assigned with the responsibility to
check final accounts and thereby assesses deficiencies as well as risks that are associated with
business practices. Hence, internal audit is conducted by employees and in this auditor is
appointed by the team of management (Mees, 2017). On the other side, external audit implies for
the one which is conducted by an independent body that is separate from the organization. The
main motive behind conducting external audit is to verify the final accounts of company. Thus,
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in the case of external audit, investigation is conducted by the third party and under this scope is
decided by statue.
18.
In relation to trust, process of CPD lays high level of emphasis on organizing and
maintaining training for staff. The main objectives behind organizing training are to enhance the
competency and proficiency level of personnel. Continuous CPD aspect ensures that
organization is complying with the aspect of record keeping and maintenance to a great extent
(Harrison, 2015). Hence, by developing the abilities of personnel concerned authority of trust
would become able to monitor transactions in an effectual way.
19.
Five major elements of trusts that help in building it include settlor, trustee, beneficiary,
specific property and personal obligation. Hence, all such five are the main elements are highly
required to for making a trust.
20.
By considering the section 74, it can be stated that after receiving money a licensee must
require to deposit money in general trust account.
21.
In the recent times, computerized accounting system becomes a prior requirement due to
the following factors:
 Australian accounting standards and code of practices and security aspect
 Facilitates chronological record of information about client name and address, matter
reference as well as description, legal account number.
22.
At the end of each month, concerned authority is required to prepare summary of the
account or transactions made during such time frame (Crutchfield, P.D., Craig, R.G. and
Batrouney, 2015). This in turn provides deeper insight about the activities of trust account and
thereby helps in making further decisions.
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23.
In the case of trust account, it is highly required for the firm to follow all the laws and
legislation introduced. On the basis of fiduciary relationship aspect, trustee is obliged to act for
the interest of others. Thus, by following specific rules regarding trust law concerned authorities
would become able to perform activities in an effectual way.
24.
From assessment, it has been identified that OC is required to give notice to the lot owner
in relation to any fees or charges which are due. In this regard, concerned authority needs to
follow section 31which contains rules regarding fees notice or aspects (Harris, 2016). Thus, lot
owner is obliged to make payment of fees and other charges within the 28 days after notice. In
addition to this, lot owner also has obligation to make payment according to interest rate
mentioned in notice.
25.
Summary of trust accounts
 Section 12: This section of trust account entails that any contribution which is made as
voluntary for charitable and religious purpose qualify for tax exemption to some extent.
In other words, it can be said that income comes under the criteria of tax deduction when
it used for the purpose of trust.
 Section 13: In Trust law, section 13 lays high level of emphasis on maintaining record of
accounts in electronic format.
 Section 14: Such Act entails that while practicing the power of investment professional
trustee is highly required to follow care and diligence. Hence, if trustees do not have
professional knowledge then they require acting like a prudent person. By this, trustee
would become able to carry out activities more effectually.
26.
Once auditing aspect has been completed thereafter concerned authority will prepare
report in a highly structured format. This in turn clearly entails the areas which require high
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improvement. On the assessment of assessment of error regarding monetary records supervisor
can file notes and present the same to higher authority as per the section 154 (1) and 154 (2).
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REFERENCES
Books and Journals
Crutchfield, P.D., Craig, R.G. and Batrouney, E.J., 2015. Korda v Australian Executor Trustees
[2015] HCA 6: imputed trusts in a commercial context—Australia clarifies its
approach. Trusts & Trustees. p.179.
Davenport QC, K. and Thompson, S., 2016. Piercing the trust structure at a relationship’s end:
interesting developments in trust law from the New Zealand Supreme Court. Trusts &
Trustees. 22(8). pp.864-873.
Harris, K., 2016. Trusts: Navigating the land of the lost (trust deed). Bulletin (Law Society of
South Australia). 38(9). p.30.
Harrison, L., 2015. Property investment through discretionary trusts. Taxation in
Australia. 50(2). p.84.
McLean, C. and Paull, C., 2017. Alternative assets insights: When is a trust a unit
trust?. Taxation in Australia. 51(7). p.392.
Mees, B., 2017. Organizational mimesis and the emergence of industry superannuation in
Australia. Journal of Management History. 23(3).
Online
Accounting for trust money - estate agents. 2016. [Online]. Available through: <
https://www.consumer.vic.gov.au/businesses/licensed-businesses/estate-agents/running-your-
business/trust-accounts/accounting-for-trust-money>. [Accessed on 19th June 2017].
An overview of trusts in Australia. 2017. [Online]. Available through: <
https://www.davidgarry.com.au/overview-of-trusts-in-australia.html>. [Accessed on 19th June
2017].
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Family Trusts explained and Family Trust Elections explained. 2017. Online]. Available
through: < https://www.cleardocs.com/extra-family-trust.html>. [Accessed on 19th June
2017].
Inter-vivos trust. 2017. [Online]. Available through: <http://www.aetlimited.com.au/trustee-
services/for-you-and-your-family/supporting-pages/inter-vivos-trusts>. [Accessed on 19th
June 2017].
Trust accounts. 2016. [Online]. Available through: <
http://www.fairtrading.nsw.gov.au/ftw/Property_agents_and_managers/
Agency_responsibilities/Trust_accounts.page>. [Accessed on 19th June 2017].
Trusts. 2017. [Online]. Available through: < https://www.ato.gov.au/General/Trusts/>.
[Accessed on 19th June 2017].
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