Trust Account information: Investment Money
Trust money invested on behalf of a client:
- Is deposited to a general trust account, before being invested.
- A general trust account receipt is issued—posted to general account cashbook and client ledger.
- Is then withdrawn from the general trust account and deposited to an interest bearing account in name of [firm] ATF [client].
- Requires written direction or note from the client to invest.
- Investment is recorded in a client investment ledger account.
- Any withdrawal from an investment account should be returned to the general trust account prior to disbursement to the entitled beneficiary.
- Trust money invested is not usually going to be accessed for a length of time.
Example of investment
P & G Law Firm currently hold $580,000 in their general trust account being a deposit for a conveyancing matter.
The matter has been delayed and is not expected to progress for a number of months.
The client directs P & G Law Firm to invest the money in a term deposit to gain interest during that time.
This Register is used to record every investment of trust money made by a law practice. A register must be kept if the practitioner invests trust money on behalf of a client. (Refer to section 59 of the LPR.)
Information required in the Register:
- name in which the investment is held;
- name of the person on whose behalf the investment is made;
- the person’s address;
- particulars sufficient to identify the investment;
- the amount invested;
- the date the investment was made;
- particulars sufficient to identify the source of the investment, including, for example:
- a reference to the relevant trust ledger; and
- a reference to the written authority to make the investment; and
- the number of the cheque for the amount to be invested;
- details of any document evidencing the investment;
- details of interest received;
- details of the repayment of the investment and any interest on maturity or otherwise.
This document refers to section 59 of the Legal Profession Regulation 2007 (‘LPR’).
If you have any questions about this topic, please contact the Law Society's Finance & Business Services Manager, Lea McLean, on (02) 6274 0300 or email email@example.com.