Glossary
Trust accounting
Trust accounting is how a law practice receives, records and pays out money it holds for clients, such as money paid in advance for legal costs. In Victoria, the Legal Profession Uniform Law and the Uniform General Rules require trust money to be banked in a general trust account with an approved deposit-taking institution, recorded against each client's ledger, and withdrawn for legal costs only in permitted ways, such as after giving the client a bill and time to object. Trust records must be reconciled monthly, kept in compliant software or ledgers rather than a spreadsheet, and examined each year by an external examiner. The Victorian Legal Services Board + Commissioner regulates trust accounts.
Also called Trust account, Trust money, Law practice trust accounting
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Example
In a law firm
For example, a family law practice receives $5,000 from a new client in advance for legal costs. It goes into the general trust account and onto that client's trust ledger the same day. When the first bill is issued, the practice transfers the billed amount to its office account only once the conditions for withdrawing costs are met, and at month end it reconciles its trust records against the bank statement.
This is general information, not legal advice.
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