Help opening an Interactive Brokers account with a Corporate Trustee

Tooth Faerie said:

Do you have any recommendations for the cheapest alternative broker for just data use?

What part of the application are you up to now? Do they ever need us to prove out net worth and liquid net worth we put down as part of the application?

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I don't know about CME futures (I don't even know what they are), but on the IG website they talk about Live Data incurring a monthly fee that is refundable based on trades, but I don't know the details. If you have an individual account with IB in addition to the trust account, then you could get your data through that at a much more reasonable amount.

I am at the documentation stage and ran into some hiccups. They had some annoying things like for proof of address of one of the beneficiaries a statement from a broker was sufficient. When I submitted one from CommSec it was rejected because it wasn't a US broker. Unfortunately he is away on vacation and I don't want to access his personal records without permission. I am also awaiting a tax file number for the trustee and although they normally can be updated at a later stage, the app doesn't seem to accept it.

I don't think they need to prove net worth, as they didn't for both individual and company accounts I previously set up

bellenuit said:

I don't know about CME futures (I don't even know what they are), but on the IG website they talk about Live Data incurring a monthly fee that is refundable based on trades, but I don't know the details. If you have an individual account with IB in addition to the trust account, then you could get your data through that at a much more reasonable amount.

I am at the documentation stage and ran into some hiccups. They had some annoying things like for proof of address of one of the beneficiaries a statement from a broker was sufficient. When I submitted one from CommSec it was rejected because it wasn't a US broker. Unfortunately he is away on vacation and I don't want to access his personal records without permission. I am also awaiting a tax file number for the trustee and although they normally can be updated at a later stage, the app doesn't seem to accept it.

I don't think they need to prove net worth, as they didn't for both individual and company accounts I previously set up

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Just to clarify, you had to enter in your net worth during the application, right? But they just don't require proof?

Tooth Faerie said:

Just to clarify, you had to enter in your net worth during the application, right? But they just don't require proof?

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Yes, that was the case with my previous applications. They asked for net worth, but didn't check it. Similarly for trading experience: Shares traded per year, options etc.

bellenuit said:

Yes, that was the case with my previous applications. They asked for net worth, but didn't check it. Similarly for trading experience: Shares traded per year, options etc.

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Thanks for the answer

IB has now come back requesting the Trust's ABN, even though there is no requirement for it to have an ABN as it is not in business (just investing).

Sometimes it is easier to go with the flow. Is there any disadvantage to having an ABN for a trust, other than any applicable application fee?

bellenuit said:

IB has now come back requesting the Trust's ABN, even though there is no requirement for it to have an ABN as it is not in business (just investing).

Sometimes it is easier to go with the flow. Is there any disadvantage to having an ABN for a trust, other than any applicable application fee?

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Just tell them that the Trust is not carrying on, nor does it intend carrying on a business and therefore is not entitled to apply for (and nor does it require) an ABN.

https://abr.gov.au/For-Business,-Super-funds---Charities/Applying-for-an-ABN/ABN-entitlement/

bellenuit said:

IB has now come back requesting the Trust's ABN, even though there is no requirement for it to have an ABN as it is not in business (just investing).

Sometimes it is easier to go with the flow. Is there any disadvantage to having an ABN for a trust, other than any applicable application fee?

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i don't recall paying any upfront fee for my trust's ABN, and i definitely don't pay any ongoing fees for it. there will be an upfront incorporation fee and yearly company registration fees (about $250) that have to be paid to ASIC for your trustee's ACN however.

if your accountant won't charge you extra to apply for an ABN, i'd say just go for it. then it'll be there when you need it, if you happen to start doing more trading in your trust later on, instead of investing only, you can immediately start claiming GST refunds.

How long should I expect to wait for the application to progress after uploading the required docs and mailing them the certified docs?

Will they email me when they need something or should I keep logging back in to check?

Tooth Faerie said:

How long should I expect to wait for the application to progress after uploading the required docs and mailing them the certified docs?

Will they email me when they need something or should I keep logging back in to check?

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As long as the application isn't fully completed (step 7), every time (at least in my case) you log in it should bring you to the Application Status page that shows you how far you have progressed along the 7 steps to completion. If they haven't processed the docs you sent yet (step 4), you can still complete the remaining steps and hopefully it will come good. There is a review status at the end that shows all steps that have been completed and I assume that will indicate the docs have been approved at some stage (step 4 should show the status of each requested doc).

If nothing seems to be happening, I would use one of the contact methods shown on the right of the application status screen to check on what might be wrong. I would allow probably 1 week after you think they have received the docs before initiating contact from your side This allows them time to validate some of the documentation sent.

Just under 2 weeks now and no progress.

Called them and they said they'll look into it.

DaveDaGr8 said:

In regards to the % ownership, i just filled it out with the named beneficiaries and added the numbers up to 100%. These numbers probably make more sense to other structures, joint accounts, unit trusts etc. They don't make any sense to a purely discretionary trust and technically as trustee you can make the numbers up as you go along, which is exactly what i did.

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How did you get through the % Ownership of the Grantor/Settlor question?

I was having a lot of issues with the required documentation in the approval section. I then got an email from IB saying, among many other requirements, that I needed to add the Settlor. The Settlor was the accountant that set up the trust and paid the initial settlement sum of $10. This I did, but now it is asking for the following:

Registered Settlors/Grantors: It lists in this section the Corporate Trustee (I didn't add this, this was put in there by the application) and the Settlor I just added and asks for the % ownership of each. I have put 100% for the corporate trustee and 0% for the Settlor. But it says 0% is not allowed and won't let me proceed.

I am reluctant to say 99%, 1% as the Settlor does not have any ownership and is in fact listed as an Excluded Person in the Trust Deed.

To make matters worse, the Settlor, whom I have previously had no relationship with and found through searching for local accountants with trust expertise, having set up the Trust and corporate trustee and paid the Settlement Sum, provided me with several certified copies (by him) of the Trust Deed. But IB are rejecting these saying that the Settlor is not independent. They also asked for a certified copy of the ASIC Company Extract of the corporate trustee. This I mailed them along with the certified trust deed and they rejected that too saying that the extract needed certification on both sides of each of the two double sided pages, not just on one face of each page.

Out of curiosity I went through the application process for IG. Apart from being easy and intuitive, they have gone out of their way to help me set the account up.

I am awaiting IB to get back to me on the Settlor % Ownership issue before I go to the trouble of getting new certifications of the trust deed and company extract, but I am so close to walking away from it all. I currently have 2 accounts with IB each of considerable value, but that seems to count for nought with them. I am reluctant to go with IG but may have no choice but to do so.

Hi bellenuit

How did you go with IB. Were you able to setup as a corp trustee with your DFamily Trust?

gretrust said:

Hi bellenuit

How did you go with IB. Were you able to setup as a corp trustee with your DFamily Trust?

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Yes, it is all fine now. There were issues with the Settlor, as the Settlor was my accountant and they wouldn't accept him as the certifier of much of the documentation they sought, as they said he wasn't independent of the Trust. In the end I had to get another accountant from the firm to certify the required documents. I think the issue was that a Settlor has a different capacity in the US to here, where here the Settlor is usually the person who puts up the nominal $10 to initially fund the Trust, but in the US is the person who provides the major assets of the Trust

What was annoying was the extra steps I need to do to obtain margin facilities, only having to have them withdrawn a few months later after been migrated to IB Australia.

Good to know.

I plan to open a TRUST trading account with IB (non margin) and am in the process of registeringa company for the corporate trustee up.

- Im a bit unsure of how much shares should be allocated and the value, can I leave the number of shares as '1' and the value as '0$'.

- Will the shares will be beneficially held by the shareholder?

- Any additional info on 'empty company' structure for minimum liability would be great.

gretrust said:

Good to know.

I plan to open a TRUST trading account with IB (non margin) and am in the process of registeringa company for the corporate trustee up.

- Im a bit unsure of how much shares should be allocated and the value, can I leave the number of shares as '1' and the value as '0$'.

- Will the shares will be beneficially held by the shareholder?

- Any additional info on 'empty company' structure for minimum liability would be great.

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You only need to have one share and should give it a nominal value, $1 being the most common. In your company accounts it will appear as Issued Shares (or sometimes, I think, Paid Up Capital) and will be offset by a $1 deposit in Cash On Hand (or something similar). You only need that to balance the books so to speak, so you don't have to deposit it anywhere. However, it is separate from Trust funds as it is an asset of the company.

I actually issued 7 shares with 4 to me, 2 to my spouse and 1 to my son. The value of the issued shares are thus $7 ($1 per share) in my case. The reason I did it that way is to ensure I have unchallenged control over the company and thus over the Trust. With 4 shares I have more voting power than my spouse and son combined and should I die, my spouse has more votes than my son (even if my shares are allocated to each 50/50). It also allows for the company directorship to easily change in the event of my death or my spouses death, without affecting the Trust. It may be over the top but it made sense to me at the time.

Each shareholder is a beneficial owner of the company, which is separate to them being beneficiaries of the Trust, the latter being specified in the Trust Deed.

You will be the Director and Secretary.

The company will have an ACN, but if acting only as corporate trustee (as in my case), it will not have an ABN or Tax File Number.

One thing I am not sure of is the Annual ASIC fee ($263) and Company Statement. I have a separate company for share trading, unrelated to the Trust, and on March 31st I received an email from ASIC indicating that I should download and review the Company Statement (which details the name, business address, share structure of the company etc). You are expected to review this and make changes if it needs updating. You are also invoiced for the annual ASIC fee and must pay by May 31st or thereabouts.

However, I didn't receive a similar communication for the company that acts as corporate trustee. I don't know if this is because it doesn't have an ABN and/or Tax File number or some other reason. I will check this out next week.

I am not an accountant so others more familiar with Trusts might check the above out or pass it by your accountant.

bellenuit said:

However, I didn't receive a similar communication for the company that acts as corporate trustee.

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Actually, re-reading the email from ASIC for the other company, it states that the Company Statement and invoice is sent on the anniversary of the company registration. So in the case of the Corporate Trustee, that won't be until end of July.

Thanks for the input @bellenuit