Trust Balances and Shortages

You must always maintain enough money on deposit to meet your clients' obligations in each pooled or separate trust account (Rule 119.24(1)).

Ensure that:

  • funds have actually been deposited and that they have cleared (no holds or restrictions);
  • any withdrawal is coming from the same trust account to which the deposit was made;
  • the funds on deposit are sufficient to cover the withdrawal;
  • the trust funds can be used for the purpose of the withdrawal (i.e., the funds are not impressed with a trust for a different purpose, there is no court order, contractual obligation or other charge prohibiting withdrawal); and
  • the withdrawal will not breach an undertaking.

Always review the individual client trust ledger card and bank balance before issuing the trust cheque. The individual client trust ledger card must show sufficient funds to cover your cheque. You will have a "shortage" if there are not sufficient funds to the credit of that client, or if funds deposited to your client's credit have not cleared.

Note: even if the overall pooled trust account has enough money to cover the cheque, you will create a "shortage" if that client does not have sufficient funds in the pooled account. You must have enough funds on-hand to cover all trust obligations (Rule 119.24(1)).

<3.9 Paying Your Fees from a Trust Account

3.11 I Have a Trust Shortage - Now What?>

Last modified: Tuesday, 15 June 2021, 6:02 PM