Trust and controlled money accounts
What is trust money?
Trust money is the money entrusted to a law practice in the course of or in connection with the provision of legal services by the practice. For example, where money is held for the payment of stamp duty during the purchase of property, or received from the proceeds of a court action.
How must a solicitor handle trust money?
The Legal Profession Act 2006 governs how solicitors handle trust money. Under the Act solicitors must:
- disburse trust money only as directed by the person on whose behalf it is held
- deposit trust money to a general trust account maintained with an approved authorised deposit-taking institution in the ACT
- keep accurate records of their trust accounts and make them available for inspection by external examiners.
How are trust accounts checked?
The Law Society has the responsibility for examining records maintained by legal practitioners to ensure they properly account for the money received which is held on behalf of another person.
This involves trust account investigators visiting law practices throughout the ACT on a regular basis in order to detect and prevent fraudulent practices. The Law Society also assists solicitors in complying with the legislation through the provision of education and assistance.