Also known as: trust account
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
An account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to pay bank service charges on the account. Advance legal fees and expenses must be deposited into the account and withdrawn only as earned or incurred.
An account maintained by a lawyer to hold funds of clients or third persons separate from the lawyer's own property. The lawyer may deposit personal funds only in the amount necessary to pay bank service charges on the account. Advance legal fees and expenses must be deposited into the account and withdrawn only as earned or incurred.
Select any source to read its text and confirm it supports the definition.
A bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The arrangement creates a tentative trust that the depositor may revoke at any time by withdrawing the funds or changing the account designation.
Select any source to read its text and confirm it supports the definition.
A bank account opened by a depositor in the depositor's own name as trustee for a named beneficiary. The arrangement creates a tentative trust that the depositor may revoke at any time by withdrawing the funds or changing the account designation.
Each sense below has its own examples, sources, and questions.
Talia Torres maintains a client trust account for her real-estate practice. The bank charges thirty dollars per wire transfer. Talia deposits fifteen thousand dollars of her own money into the account and leaves it untouched for six months even though actual charges average only two hundred dollars monthly. The excess personal funds violate the rule limiting deposits to the amount necessary for service charges.
Thunderbolt Motors pays Timothy Tang a twenty-thousand-dollar retainer before he begins work on a product-liability defense. Timothy deposits the entire sum into his client trust account. He withdraws portions only after he completes each phase of discovery and billing. The deposit and withdrawal pattern complies with the requirement that advance fees remain in trust until earned.
No. The rule permits a lawyer to deposit personal funds only in the amount necessary to pay bank service charges. A fixed fifteen-thousand-dollar buffer that greatly exceeds documented monthly charges violates the limitation even if no client funds are lost.
Supporting sources
Advance fees and expenses must be deposited into the client trust account upon receipt. The lawyer may withdraw the funds only as fees are earned or expenses are incurred.
Supporting sources
Yes. Once the lawyer observes the recurring charges, continuing to hold an unchanging and excessive personal balance exceeds the amount necessary for service charges and subjects the lawyer to discipline.
Supporting sources
Tracy Torres opens a savings account titled "Tracy Torres in trust for Tanner Thompson." She retains the passbook and never tells Tanner about the account. Three years later she changes the title back to her own name alone and withdraws the balance. The change revokes the tentative trust and returns the funds to Tracy's sole ownership.
The change revokes the tentative trust. The depositor regains sole ownership and may withdraw the funds without any claim by the named beneficiary.
Supporting sources
…the bank book and failing to notify the beneficiary, creates a trust if the depositor dies before the beneficiary, leaving the trust account open and unexplained.” ( Cunningham v. Davenport , 147 N. Y. 43, 47.) When a deposit is made in trust and the depositor dies intestate leaving it undisturbed, in the absence of other…