Before you commence trade with a new trading partner it’s important you identify the trustee of the trust.
A trustee is the legal entity and conducts trade for the trust according to what is set out in the trust deed. This is critical as a trustee owns all legal interest and is personally liable for all expenses involved with the administration of the trust.
A trust is an obligation imposed on a trustee to hold property or assets for the benefit of others known as beneficiaries. It is not a legal entity so it cannot trade in its own right and generally can’t be sued in the event of non-payment, which is why you want the trustees name on your credit applications and purchase orders.
Who can be a trustee?
A Trustee can be:
- Proprietary Limited company/ies
The most commonly seen Trustees are Proprietary Limited companies and Sole Trader/Individual.
- For companies: usually a director of the company is a specified beneficiary of the trust and will be registered on ASIC with an Australian Company Number (ACN), occasionally they may also have an ABN if they are also trading as an individual.
- For Individuals: this person will normally be one of the specified beneficiaries of the trust and will normally have an Australian Business Number (ABN).
Types of trusts
There are three main types:
- Discretionary/Family Trust
- Set up to protect a family’s assets in the event liabilities occur due to bankruptcy or insolvencies. Also provides a channel to pass family assets to future generations.
- The trustee chooses which beneficiaries receive interest and how much interest they will receive
- Unit Trust
- Used for business purposes rather than family. At the end of each year, income is distributed to Unit Holders according to the proportion of units held by each beneficiary. Units can also be bought and sold.
- The beneficiary chooses how much interest they wish to invest and therefore the number of units they wish to hold
- Hybrid Trust
- A cross between a Discretionary Trust and Unit Trust. It allows beneficiaries to receive fixed entitlements to income or capital each year AND the trustee also has discretion to distribute some of the income or capital to the beneficiaries.
Summary of the information you need to collect from potential trading partners
|Pty ltd company||individual/sole trader||partnership of trusts|
|Trust ABN||Trust ABN||ABN of the Partnership|
|Trustee ACN||Full name of the Individual/s||Full name of the Trustees of the Trusts|
|Full name of the Trustee||Registered address of the business||Registered address of the business|
|Registered address of the Trustee||Date of birth of the Individual/s|
|Drivers License number (not essential)|
For more information contact your Atradius Account Manager.