If you receive or disburse client trust funds, you will need to open a trust bank account. There are four different types of trust bank accounts:

1. Mixed Trust Account

This is the most common type of trust account used in a law office. It is also called "pooled" trust account or operating trust account. A mixed trust account holds money for more than one client. There are specific rules regarding opening or closing a mixed trust account. The interest earned on these bank accounts is remitted to The Law Foundation of Ontario. You should deposit any trust money you receive by the end of next banking day. Your trust account should be clearly identified as "in trust" on your bank statement and cheques.

 2. Separate interest bearing trust account

Unlike a mixed trust account, a separate interest bearing trust account contains money for only one client in an interest-bearing form such as passbook accounts, GICs, or Term Deposits. The interest earned on a separate interest bearing account is the property of the client and should be recorded in your trust receipt records. And the same idea, any service charges are charged to the clients and recorded as client disbursement. The account should be set up in your or your firm's name in trust for [client name].

3. Estate and power of attorney account 

This is the separate bank account to hold the estate funds. If you exercise a power of attorney for property or act as an estate trustee or solicitor with control of the estate assets,  you should ensure to keep proper trust accounting records and reconcile the accounts monthly.

4. E-reg trust account

These are special trust accounts you set up to authorize Teranet to withdraw the registration fees and land transfer tax for electronic registrations in Ontario's land registry system. An E-reg account is a mixed trust account. Interest earned on e-reg trust accounts should be paid to The Law Foundation of Ontario. 

Note: you don't have to use a trust account for your e-reg account; you can use a general account. The advantage of using a general account is that it simplifies the bookkeeping.

We provide one-stop accounting services to lawyers: bookkeeping, spot audit assistance and tax return preparation.