Types of Trust Accounts - Separate Interest-Bearing Trust Accounts (SIBA)

Your client can instruct you (in writing) to place his or her funds into a separate interest-bearing trust account (Rule 119.20(1)). 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. 

SIBAs include bank savings accounts, term deposits and other similar financial instruments maintained at an approved depository.  Your client is entitled to the interest made on money held in a separate trust account (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. The key issue to remember is that the funds are invested in near zero or low risk investments.

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.

You may only transfer money between a pooled trust account and a separate interest-bearing trust account within the same branch of the approved depository (Rule 119.20(1)).

Rule 119.20(1) provides that all separate trust accounts must be in your law firm's name, in trust for the client and include a reference to the specific client. You must disclose sufficient information to identify the client (Rule 119.20(3)).

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).

<3.6 Types of Trust Accounts - Pooled Trust Accounts

3.8 Withdrawing Trust Funds>

Last modified: Monday, 22 February 2021, 1:49 PM