This section describes the receipt of trust money into a pooled trust account. Regardless of whether your client wants their funds in a separate interest-bearing trust account (SIBA), you must always deposit the funds initially into your pooled trust account. You may then transfer funds to a SIBA.
Pooled trust accounts must be:
- Separate: The pooled trust account must not be commingled with any personal or general funds of the firm or of any lawyer.
- Identifiable: The pooled trust account bank statements, cheques and deposit slips must be clearly labelled as “trust”.
- Accountable: Financial records for the pooled trust account must be accurate, up-to-date, and retrievable on demand. Records must be maintained for at least 10 years after matters are completed.
If you have a pooled trust account, you must consider the following:
- the account must be established at an approved depository (i.e., a bank, credit union or Alberta Treasury Branch in Alberta) (Rules of the Law Society of Alberta, Rules 119.17(3)(c) and 119(e))the account must be kept in your law firm's name (Rule 119.17(2));
- the account must be designated as a "trust account" containing funds for more than one client, and the word "trust" must appear on both your bank statements (Rule 119.17(3) and (4)) and cheques;
- the account must hold sufficient money to meet all obligations with respect to trust money held for clients (Rule 119.39(1));
- when you receive trust money from one client for more than one matter at the same time, you must open separate client trust ledger accounts for each matter (Rule 119.35(4)(b));
- you must deposit all trust money that you receive into a pooled trust account before the next banking day (Rule 119.22(1));
- keep negotiated cheques or cheque images and bank statements as part of your prescribed financial records (Rule 119.35(2)(c)(ii)) (some approved depositories now store negotiated cheques at a data centre and this, on its own, is not sufficient. You must instruct the institution to return negotiated cheques, or acceptable electronic versions of the front and back of the cheques, to you. You can store these images digitally but cannot rely on the bank to store these records for you);
- immediately replace trust money withdrawn from a trust account by mistake (Rule 119.22(3)(c));
- maintain a maximum of $500 as a float of your own money in your account (Rule 119.22(3)(d));
- interest on a pooled trust account must be paid to the Alberta Law Foundation (Rule 119.17(5)) and you must provide a copy of the signed letter of direction (see precedent letter) to your bank, the Trust Safety department and the Alberta Law Foundation;
- the account must be reconciled monthly no later than the end of the following month (Rule 119.37) because you need to be cognizant of when a trust cheque deposit is cleared, you should confirm your approved depository’s clearing and data rules, including:
- the cut-off time for same-day deposits;
- when will cheques deposited at another branch of your approved depository be credited to your account; and
- ensuring your approved depository will provide sufficient details of transfers so you can show the source of transferred funds.
For every pooled account you hold with an approved financial institution, other than a credit union or an Alberta Treasury Branch, you must comply with the reporting and disclosure obligations set out in the Canada Deposit Insurance Corporation Act to ensure that your client’s funds are insured as applicable.
Service Charges and Credit Card Fees
Service charges and credit card fees cannot be paid from your pooled trust account, they must be withdrawn or paid from the law firm general account or from the law firm’s own money maintained within the trust account (Rule 119.29).
If you receive trust money by way of a credit card, the law firm is responsible to cover the credit card fee deducted for the credit card payment.
You must instruct your bank not to take service charges from your pooled trust account. You can put up to $500 of your own money in your trust account to cover any inadvertent posting of service charges by the bank (Rule 119.22(3)(d)).
If the bank deducts service charges or credit card fees from your pooled trust account, the law firm must immediately replace the funds by:
- requesting that the bank reverse the withdrawal and charge the general bank account;
- depositing a firm’s general cheque into the trust bank account to cover the amount of the improper deduction by the bank; or
- offsetting the charge against the $500 float that the firm is permitted to maintain in each trust bank account.
See Module 4 for information on reporting trust shortages.