Managing trust money
A law practice or an approved clerk that receives trust money must maintain a general trust account in Victoria. Penalties apply for failing to comply.
This requirement does not apply in which only controlled money or transit money (or both) are received, except where it is received in the form of cash. The trust account must be established and maintained in accordance with the Uniform Law, Uniform Rules and applicable regulations.
Can anyone else operate a trust account?
A law practice must not receive trust money unless a principal or legal director holds a practising certificate authorising the receipt of trust money.
If the authorised principal of the law practice or legal director is not available to sign a trust cheque or effect an electronic funds transfer, then any of the following may operate the trust account:
- An authorised Australian legal practitioner who holds an Australian practising certificate authorising the receipt of trust money
- Two or more authorised associates jointly (e.g. employed bookkeeper or practice manager).
The definition of ‘associate’ can be found in s6 of the Uniform Law.
Notifying the Board of a trust signatory
A law practice must give written notice of its associated who are authorised to sign cheques or effect electronic funds transfer.
When a law practice completes its annual trust examination it is required to give the Board written notice of the associates or Australian legal practitioners (including their names and addresses) who are authorised as at 1 July of that year to sign trust cheques or to effect an electronic funds transfer (see: rule 50(2) of the General Rules).
Statutory Deposit Accounts
Lawyers and approved clerks who maintain a trust account in Victoria must deposit a percentage of the trust money held into a statutory deposit account (SDA). This account is maintained within the Public Purpose Fund (PPF) and the amount is repayable on demand. The PPF generates income to pay for the regulation of the legal profession as well as providing an ongoing stream of funding support for a range of other legal bodies and programs. More information is available on our dedicated SDA page.
Deficiencies and irregularities in trust accounts
If a lawyer, associate of a law practice, approved clerk, external examiner or approved deposit-taking institution becomes aware of, or forms a belief that there is a deficiency or irregularity in any of the practice’s trust accounts or trust ledger accounts they must give written notice of this to the Board (see: ss 148 & 154 of the Uniform Law). This notification must include:
- the date on which the deficiency/irregularity occurred;
- the amount of money involved
- when/if it was rectified
- the reason it occurred
- any steps taken to reduce risk of it happening again
- any necessary supporting documentation.
A lawyer or an approved law clerk must also give written notice to us if they believe on reasonable grounds there is an irregularity in the trust account of a law practice or approved clerk that they are not associated with.
A lawyer, approved clerk or any other person is guilty of an offence if, without reasonable excuse, they cause a deficiency in any trust account or trust ledger account, or fail to pay or deliver any trust money.
These are serious offences carrying a maximum penalty of 500 penalty units or 5 years imprisonment or both.
Exemptions from trust regulations
The Board may exempt a law practice or an approved clerk from complying with any of the trust accounting obligations. See our Trust Account Regulations Exemptions Policy for further information.
You should apply in writing to the Board if you wish to apply for an exemption. Please note that in considering an application for exemption, the Board will take into account any adverse material known about your practice.