The adjustment of trust accounts is included in Article 59 Bank Law Act. A trust account agreement is a variant of a bank account agreement as defined Article 725 KC, have to it – not standard range in Article 59 – the application of the general provisions on bank accounts contained in the KC and in the Banking Law.
Subject matter of the agreement
Only the funds entrusted to the account holder (the trustee) by the person may be collected on the trust account third (the entrustor) on the basis of a separate agreement (trust agreement). The trust account shall prohibit the collection of funds other than those from the entrustor. In addition, funds of other origin should also not be collected.
Contract rights and obligations
The funds paid by the person third They're hers. On the other hand, the account holder is their trustee. The entrustor may not require payment of funds, this option shall be available only to the account holder. Moreover, the bank is also not required to carry out checks on whether the use of funds in the account has been made by the holder in accordance with the trust agreement. However, if the parties so decide, such an obligation may be laid down in the contract of the trust account.
Entrustment of appropriations shall take place for a given purpose or in a certain manner. The trustee has committed funds on his own behalf, but is obliged to entrust the trustee with the ‘accounting’ of the use of those funds and to reimburse funds that have not been used during the duration of the trust agreement.
In order to prevent the possible risk of using funds on a trust account in a way that is incompatible with the contract, the entrustor should seek to include the relevant clauses in the trust agreement in order to protect his interests.
Measures to protect the interests of the entrusted
The provisions of banking law provide for measures to protect the interests of the entrustor. First of all, the Act provides that, if enforcement proceedings are initiated against a trust account holder, the funds on the account are not taken.
In turn, in the event of the insolvency of the trust account holder being declared bankrupt, the cash on that account shall be excluded from bankruptcy and, in the event of the death of the trust account holder, the amounts collected on that account shall not fall after the account holder.
In contrast, to the bank account holder, liability on general terms is borne by the bank for damages caused by non-execution or inadequate execution of the obligation.