State Bar Of California Handbook On Client Trust Accounting In Clark
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California law requires attorneys who handle client funds or funds entrusted by others to hold them in one or more interest-bearing bank accounts labeled as a "Trust Account," or words of similar import.
Per California probate code section 16063, an accounting should include the following information for the last fiscal year of the trust or the time since a trustee last prepared and provided an accounting: A statement of all receipts and disbursements of principal and income. A statement of assets and liabilities.
To prepare an accurate trust accounting, you must keep an inventory of trust property, and copies of all account statements, invoices, and receipts. Trustees should keep records organized and utilize financial software to better track expenses and investments. Trust accounting is usually required annually for a trust.
California law requires attorneys who handle client funds or funds entrusted by others to hold them in one or more interest-bearing bank accounts labeled as a "Trust Account," or words of similar import.
You must keep a written record showing that every month you completed a three-way reconciliation where you “reconciled” or balanced the account journal against the individual ledgers and the bank statement with canceled checks. You must perform this three-way reconciliation for each client trust account you keep.
Rule 4.1 Truthfulness in Statements to Others (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Business and Professions Code section 6068, subdivision (e)(1) or rule 1.6.
Trustees must maintain separate accounts for each trust, with each client's funds handled individually. Detailed Record-Keeping: Every financial transaction involving the trust must be meticulously recorded. This includes deposits, disbursements, interest income, investment gains, and expenses.
