Yes. A trust can be owed money just like any other commercial entity, and debts owed to a trust are recoverable. The key difference is that a trust is not itself a legal entity — the trustee is the party who holds the assets and rights of the trust, and it is the trustee who has standing to sue to recover a debt owed to the trust.
What this means in practice:
- The creditor on the account is the trustee (for example, "Smith Investments Pty Ltd as trustee for the ABC Family Trust").
- When you refer the debt, you need to provide the correct legal name — the trustee's name, followed by their capacity as trustee for the named trust. This is the entity that will be named on any demand letter or legal proceedings.
- It is worth confirming that the trading records, invoices and contracts are in the trustee's name (in their trustee capacity) rather than just the trust name. Creditors named incorrectly in underlying documents can create complications in recovery.
What to provide when referring:
- The full trustee name and ABN/ACN.
- The trust name.
- A copy of the relevant trust deed or at least confirmation of the trustee's authority.
- The debtor's details and the supporting documents in the usual form.
If you are unsure about the correct legal name to use, contact us before referring and we will advise you.
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