TRUST FUNDS.

Taranaki Daily News, 23 September 1920, Page 6

TRUST FUNDS.

SHOULD BE PRODUCTIVE. Mr. Masters (member for Stratford) asked the Minister of Finance whether,] in view of the immense amount of | money that solicitors, land agents, and others are now compelled to hold in the banks in trust accounts absolutely untemunerative, except to the banks, and also in view of the ease, with which such money could be made productive both to j the country and the parties concerned by being placed on deposit by the parties at call, with, say, the /Post 4 Office Savings Bank, he will take into consideration the advisability of requiring such moneys to be dealt with in the suggested manner instead of being placed with the banks as formerly, and thereby by a simple expedient ease the strain on the public exchequer, and also make the money of benefit to the particular parties concerned? He stated that there are approximately a thousand legal firms and a great many more land agents in New Zealand, each operating trust accounts in connection with land dealing, estates, and otherwise. Assuming an average daily trust credit balance of £IO,OOO for each of the legal firms, and it is understood from a legal firm that such estimate is well within the mark, the use of £1,000,000 per day is lost to the public exchequer, the interest on that amount is lost to the particular parties concerned, and the imnks alone receive the benefit. The Rt. Hon. W. F. Massey (Minister of Finance) replied: It is not proposed to introduce legislation which might have the effect of retarding the prompt investment of trust funds. When not) otherwise required such moneys may bo paid into the bank on current account, but the responsibility of investing them to the best advantage is definitely placed upon the trustees. If trustees were to allow trust funds to reman for an unreasonable length of time in current account, they would not exercise 'that strict diligence required of them, and thus commit a breach of duty for' which under the existing law they may be penalised. It is pointed out that creators of trusts have full power to give directions regarding the cash and property which they may vest in trustees, and that any interference in the private relations which exist between them, their trustees, and the banks does not appear necessary. The Post Office Savings Bank is however already largely used by trustees.