Also known as: trust accountings · trust account
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A set of rules requiring a lawyer to segregate client or third-party funds in a separate account. Personal funds may be deposited only in the amount necessary to pay bank service charges on the account. Advance legal fees must be deposited into the account and withdrawn only as earned.
A set of rules requiring a lawyer to segregate client or third-party funds in a separate account. Personal funds may be deposited only in the amount necessary to pay bank service charges on the account. Advance legal fees must be deposited into the account and withdrawn only as earned.
Select any source to read its text and confirm it supports the definition.
The fiduciary process of allocating receipts and disbursements between income and principal to protect the distinct interests of current and remainder beneficiaries. Modern statutes permit a trustee to elect a unitrust formula or to adjust allocations for total-return investing.
Select any source to read its text and confirm it supports the definition.
The fiduciary process of allocating receipts and disbursements between income and principal to protect the distinct interests of current and remainder beneficiaries. Modern statutes permit a trustee to elect a unitrust formula or to adjust allocations for total-return investing.
Each sense below has its own examples, sources, and questions.
Thaddeus Tran maintains a client trust account for Tessa Takahashi's settlement proceeds. The bank charges thirty dollars per wire. Thaddeus deposits two hundred dollars of his own money solely to cover expected service charges. He withdraws only the actual fees each month and leaves client funds untouched.
Taliah Tang receives a fifty-thousand-dollar retainer from Thomas Thompson before beginning work on a contract dispute. She deposits the entire sum into her client trust account. As she earns fees each month she withdraws only the earned portion and leaves the balance untouched.
Titan Industries places settlement funds in attorney Tessa Takahashi's IOLTA account. The interest generated is automatically paid to the state legal-services foundation. Tessa keeps no portion of the interest and reports the arrangement on her annual registration.
A lawyer may deposit personal funds only in the amount necessary to pay bank service charges. A large standing balance unrelated to actual charges violates the rule.
Supporting sources
Advance fees and expenses must be deposited into the client trust account and may be withdrawn only as the fees are earned or the expenses incurred.
Supporting sources
Theresa Tucker serves as trustee of a trust holding publicly traded securities. Current beneficiary Tristan Thompson needs steady income while remainder beneficiaries seek growth. Theresa elects the optional unitrust regime and distributes four percent of the trust's average fair market value each year regardless of actual dividends received.
Thaddeus Tran opens a savings account titled in his name in trust for his brother Thomas Thompson. He retains the passbook and makes no disclosure to Thomas. Three days after Thomas dies, Thaddeus retitles the account solely in his own name and claims the funds as his own property.
A trustee may elect to calculate income as a fixed percentage of the trust's average fair market value rather than tracking actual receipts and disbursements between income and principal.
Supporting sources
Retention of the passbook together with lack of disclosure and later revocation shows the depositor never intended an irrevocable trust and the account remains the depositor's property.
Supporting sources
…to avoid commingling their clients' money with their own, but it is not unethical to pool several clients' funds in a single trust account. Before 1980 client funds were typically held in non-interest-bearing federally insured checking accounts. Because federal banking regulations in effect since the Great Depression…