2017-03-08 00:00:00 Running a Business English Understand the implications of managing a trust accounting, including where to put clients' funds, how to keep accounts separate, and how... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/attorney-meets-with-banker-to-set-up-trust-account.jpg https://quickbooks.intuit.com/ca/resources/business/use-trust-account-to-organize-finances-legal-practice/ Use a Trust Account to Organize Finances for Your Legal Practice

Use a Trust Account to Organize Finances for Your Legal Practice

1 min read

A trust fund is an account you would manage on behalf of a client. Even though you are in possession of the client’s money, you are required to keep this money separate from your firm’s finances. Depending on your jurisdiction, you may either have one trust fund to hold all of your client’s property or a separate fund for each client. Depending on your firm’s location, you may also have restrictions on what type of institution you can put your client’s money into. In general, you should deposit prepayments for legal services into a separate attorney trust account. When you have provided the legal services, you can move the funds to your firm’s operating account. You should consider using accounting software that reconciles between the balance in the trust accounts and the trust liability account on your balance sheet. With standard trust software, you can set clients up with their own ledgers, easily track the movement of money, and produce trust reports. When you are hired to perform legal services that require you to hold a client’s money, your clients are generally entitled to the interest earned from money deposited into a trust account. Another standard practice is that all nonrefundable fees must typically be confirmed in writing. Plus, no banking fees should be taken from your client’s trust accounts. Make sure your clearly communicate with your bank that all banking expenses should be paid by your firm’s operating account. Failing to properly manage your client’s funds in a trust can lead to discipline and disbarment. Therefore, understand the rules surrounding operating a trust fund and appropriately manage your client’s funds.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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