Separate Interest-Bearing Trust Accounts (SIBA)

Your client can instruct you to place their funds into a SIBA (Rules of the Law Society of Alberta, Rule 119.18). All SIBAs must be opened in the name of the law firm “in trust for the client” and the name of the bank account shall include a reference to the specific client to ensure appropriate disclosure of ownership of funds. The SIBA maintained by the law firm must be at the same approved depository as the pooled trust account (Rule 119.18(4)). 

To ensure the return will outweigh the cost of setting up a SIBA, consider the amount of the deposit, the time you expect to hold it and the applicable interest rate. If the net return does not warrant the expense of setting up a separate account, advise your client and seek amended instructions. If a client requires a SIBA to be maintained, this should be requested in writing (Rule 119.21(1)(b)).

Your client is entitled to the interest made on money held in a SIBA (section 126(3) of the Legal Profession Act). Interest paid on SIBAs is the property of the client and interest must be recorded on the client’s trust ledger monthly or on maturity. 

Open a separate ledger card for each SIBA. The interest on a SIBA must be posted when credited to the account. Where you have a daily interest savings account that is posted monthly, you must obtain a statement updated at the end of each month for the purpose of reconciling the account. The interest is posted to a GIC or a term deposit when the term of the instrument expires; accrued interest must be posted when a GIC or term deposit is rolled over. Keep all SIBA statements and GICs together in a central location and in the client’s file. 

SIBAs are part of the trust liability of the lawyer and each SIBA must be reconciled monthly or at maturity of the investment vehicle. Client money must be deposited into the pooled trust account before being transferred to the SIBA.

The gross trust liability of your firm includes the amounts held in clients’ SIBAs and the amounts in your pooled trust accounts. Some lawyers make the mistake of removing the trust liability from the accounting records at the time a client’s funds are transferred from a pooled trust account to a SIBA. Your gross trust liability is unaffected by a transfer from one trust account to another. 

The wrong way to show a transfer from a pooled trust account to a SIBA is: 

DEBIT: trust liability account

CREDIT: pooled trust account

The right way to show the transfer from a pooled trust account to a SIBA is: 

DEBIT: client’s SIBA

CREDIT: pooled trust account

In this way, the trust liability is unaffected, but the amount of the client’s trust money is segregated to a SIBA. 

If you have deposited funds in a pooled trust account in expectation of an early payout, you should consider seeking your client's written instructions to open a SIBA if the payout is delayed. There have been claims made against lawyers for failing to recommend a SIBA in appropriate circumstances.

If you have failed to open a SIBA after having committed to the client to do so, please report the matter to the Alberta Lawyers Indemnity Association (ALIA).

Last modified: Monday, 21 August 2023, 10:41 AM