Question 3 For two years, Jenny Ford has been the Administrator and Trustee of t

Question

Question 3

For two years, Jenny Ford has been the Administrator and Trustee of the will of her late father, Harry Ford, who died in October 2007. She established an account some time ago at her Bank in the name of ‘Jenny Ford – Trustee for the Estate Late Harry Ford’. She continues to act as the trustee in distributing the last funds in her late father’s estate and there is $10, 000 standing in the account. Jenny finds herself very short of cash and last month drew a cheque on the Estate account for $1, 500 to meet pressing living expenses. As she is becoming more financially pressed, Jenny now believes that she will have to do the same again this month. She drew the last cheque to pay a local grocery store and the Bank manager is shown this cheque by an employee who believes that there may be something wrong with this payment.

Advise the Bank as to its legal duties and obligations.

Explanation / Answer

Non profit organizations do not operate with the objective of earning profit, their main objectives are to provide service to the members or beneficiaries. The surplus of this organization is not distributed among its members.

Jenny Ford has been the Administrator and Trustee of the will of her late father Harry Ford. Amount received as a legacy may be small or big, Legacy may be may be for specific purpose or just general.

Trustee has some general responsibilities.

a) Trustee should be person in charge to keep all up to date records all the records assets, any donations received, any disbursements, tax filed receipts if any etc.

b) Trustee should not be either directly or indirectly involved in misappropriation of trust funds.

c) Trustees personal assets and liabilities should never be mixed with along Trust assets and liability.

d) Trustee cannot use trust's funds other than which is created for (intended to use).

Bank manager does not have any obligation to pass the check presented for with draw, bank can also reject payment to persons other than the regular withdrawer, Bank should clear the check if the signature of account holder or authorized person matches with their records and when account has sufficient balance.

Since Jenny ford has becoming more financially pressed and she used $1,500 cash with drawn for her living expenses - which is not the purpose which this fund was created.

Bank manager sensed there is something wrong when he received check (clearing) paying for in name of local grocery store as the trustee is misusing the funds. Either check presenter is not regular withdrawer one who present for clearing nor the account holder. He also sensed that trustee is not distributing funds properly which is meant to.

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