Your trustee and the trust bank accounts

A trust bank account is the point where a trust deed meets the real world. The deed says what the trustee may do; the bank decides whether it will let the trustee do it. If you are choosing or reviewing a trustee, the way the trust bank account is opened, mandated and supervised tells you a great deal about how carefully the trust is run.

This page explains who opens the accounts, who signs, how a bank sees the trustee, and why the signing mandate is the best place to start. It is general information, not advice on your own structure.

Who opens the accounts, and in whose name

Under the Hague Trust Convention, which has applied in Switzerland since 1 July 2007, trust assets form a separate fund and title stands in the name of the trustee, who must manage the assets and account for them. In banking terms, that means the account holder is the trustee, acting in that capacity. It is not you as settlor, and it is not the beneficiaries.

In practice the trustee opens the account, chooses the custodian bank with you, and signs the account documents. Your role as settlor is usually to agree the investment approach and to supply information the bank asks about. Where the deed gives you reserved powers, or appoints a protector, these may sit alongside the trustee's authority; the Convention itself accepts that reserved powers do not by themselves prevent a trust from existing. See settlor reserved powers and the trustee for the limits.

How a bank sees the trustee

A bank does not see "a family". It sees a legal relationship it must understand and document. Typically it asks four things:

• Who is the trustee, and is it entitled to act in that capacity?
• Under which law is the trust governed, and does the deed give the trustee power to open accounts and invest?
• Who are the settlor, the beneficiaries and any protector, so that the people behind the structure are known?
• Where did the assets come from?

The Convention helps on recognition: a trust validly created under its applicable law is recognised as a trust, which at a minimum means the assets are kept apart from the trustee's personal estate and the trustee can act in court in that capacity. A state is not obliged to recognise a trust whose significant elements, apart from the chosen law, place of administration and trustee's habitual residence, connect essentially with states that do not have the institution of the trust. Mandatory local rules, for instance on creditors, minors, succession rights or good-faith third parties, are not displaced either.

For the bank, a regulated trustee also simplifies due diligence: the identity of the person controlling the account is clear, and the trustee carries its own anti-money-laundering duties. See compliance and reporting duties and beneficial owner for how the people behind a trust are identified.

The signing mandate: the entry point

When you ask "who signs?", you are really asking what the mandate says. The signing mandate is the bank document that records which persons may give instructions on the trust account, alone or jointly, and within what limits. It should follow the trust deed, never replace it.

Each step should be traceable to the one before. If a signatory appears in the mandate without a matching decision of the trustee, or a payment is made that the deed does not allow, the chain has a gap.

What a good mandate settles

Example: moving a portfolio into the trust name

Example: a family established in Lausanne holds a securities portfolio at a bank in their own names. They have settled a trust and want the portfolio to belong to it.

The trustee first confirms that the deed allows it to receive and hold securities. It then opens a custody account in its own name as trustee, with a clear reference to the trust. The bank carries out its checks, including the origin of the portfolio. The family signs a transfer instruction so that the securities pass from their personal account to the trust account; the trustee does not simply "re-label" the old account.

Afterwards the settlor no longer holds the securities personally. Investment policy is agreed with you and written down, but decisions are taken under the trustee's duties. Tax treatment of the transfer depends on residence and the assets, so it needs an individual analysis before anything moves.

What the service covers

The banking and assets service covers the selection of custodian banks to fit the assets, the opening and maintenance of trust accounts, and the holding of securities, cash and company interests. It also covers arrangements for property, art and other tangibles, and an investment policy agreed with the settlor. The trustee coordinates the managers who invest the trust fund and checks that what they do matches that policy.

It suits settlors who want a clear line between their own money and trust money, families moving a portfolio into a new structure, and beneficiaries who inherit a trust and want to understand who controls the accounts. For land and buildings, see trustee duties when the trust owns property.

It does not cover tax advice for your country of residence, personal banking for the family, or the performance of investments. A trustee chooses and monitors managers but cannot promise a result.

Documents and decisions

Before the accounts are opened, expect to work through the trust deed and any amendments, a statement of the investment approach, identity documents for the people behind the structure, and evidence of where the assets come from. Decisions to settle early include the choice of custodian, the signing rules, whether an external manager is appointed, and what the trustee reports to you. The day-to-day administration page shows how these decisions are then recorded.

What the confidential assessment establishes

A confidential assessment looks at your existing or planned arrangement and establishes whether the accounts are in the right name, whether the mandate follows the deed, whether signing and approval rules are sensible, and whether the custodian suits the assets. Fees depend on the structure and are indicated after that assessment.

If you already have a trustee, due diligence on your trustee and the annual trust health check are natural companions. The information you may ask for is covered in what information your trustee must give you.