Trusts

Front 1

section 243 three elements are

Back 1

* money

* entrusted law practise

* in the course if or in connection with the provision of legal services by the practice

Front 2

entrusted

Back 2

reinforces the general belief that trust money is not merely given or delivered to law practice; it is placed in its "care and protection" to be held for or on the behalf of another.

Front 3

legal services is

Back 3

defined under s4 to mean work done, or buisness transacted, in the ordinary course of legal practice. Leagal practice by common law= legal practitioner

Front 4

what are the types of trust money

Back 4

contolled money, transit money, money subject to power, written discretion money, general trust money

Front 5

controlled money

Back 5

money received or held by the lawpractice in respect of which the practice has a writtendirection to deposit the money in an account (other than a general trust account) over which the practice has or willhave exclusive control.

Front 6

transit money

Back 6

money received (other than cash) by alaw practice subject to instructions to pay or deliver it to athird party, other than an associate of the practice.

Front 7

power money

Back 7

money received (other than cash) by alaw practice subject of a power, exercisable by thepractice or an associate of the practice, to deal with themoney for or on behalf of another person. The power tothe practice or associate may be exercisable by:(a) the practice alone, or(b) an associate of the practice alone (otherwise thanin a private and personal capacity), or(c) the practice or an associate of the practice jointlyor severally, or jointly and severally, with either orboth of the following:(i) one or more associates of the practice,(ii) the person, or one or more nominees of theperson, for whom or on whose behalf themoney may or is to be dealt with under thepower.

Front 8

written direction money

Back 8

money received (other thancash) by a law practice in respect of which the practicehas a written direction by an appropriate person to dealwith it otherwise than by depositing it in the account.

Front 9

General trust money

Back 9

any trust money received by thelaw practice that does not satisfy the above definitions

Front 10

Philpott and Associates is representing Mr Thew in a familylaw dispute and it is agreed between both parties that theproceeds of the sale of the family home ($100,000) shall beheld in Philpott and Associates’ general trust accountpending satisfactory resolution of the agreement in relationto splitting of the sale proceeds. In what name should thetrust ledger account be opened

Back 10

In terms of Clause 70 of the Regulations the ledger should beopened in the name of the person on whose behalf the money isheld. In this case Philpott and Associates is holding the moneyon behalf of the husband and the wife, therefore the ledgershould be opened in the name of both parties.

Front 11

Prior to the resolution of the dispute relating to the saleproceeds, Mr Thew requests that Philpott and Associatesrelease $33,300 which represents approximately one-thirdof the proceeds which he will certainly be entitled to receiveonce the dispute is settled. He requires the money so thathe can purchase a home unit. Can Philpott and Associatesagree to this direction by the client?

Back 11

No, Section 255(1)(b) requires that the money held in thegeneral trust account must be disbursed only in accordance witha direction given by the person (on whose behalf the money isheld). In the present situation, the money is held on behalf of Mrand Mrs Thew and therefore directions from both parties arerequired prior to any disbursement of trust money. Alternatively, Section 255(2) provides that the trust money maybe disbursed subject to an order of a court. In other words, ifthere is a court order authorising such disbursement, the$33,300 can be paid to Mr Thew’s nominated account.

Front 12

in accordance with s255 does direction need to be in writing?

Back 12

The direction by the person on whose behalf the money isheld does not have to be in writing, however it isconsidered prudent practice that the law practice developsuch office procedures to ensure that written directionsare obtained and retained in the matter file for and onbehalf of the person on whose behalf the money is held. There are situations whereby the law practice must insiston a written direction such as the direction by abeneficiary of an estate not to draw the cheque to thebeneficiary but to draw the cheque to a car yard for thepurchase of a motor vehicle in the name of thebeneficiary. In this situation the law practice would retainthe written direction and the invoice evidencing thepurchase of the motor vehicle in the name of thebeneficiary.

Front 13

What records are considered appropriate for the lawpractice to retain to ensure that the appropriate trustrecords are maintained for disbursements from the generaltrust account?

Back 13

written direcitons from the person from whose behalf the money is held or a file note to confirm the directions to pay.

Invoices/ sources record ( which may include a copy of the cheque to support the payment from the general trust account.

Front 14

On completion of the month end trial balance andreconciliation statement, it becomes apparent that due tothe dishonour of a personal cheque received into thegeneral trust account relating to the matter Thew, purchasefrom Smith, there is a debit balance of $1,000.00 recorded.What should be done to rectify this problem?

Back 14

debit balance should be immediately rectified from the general account to the trust account if funds cannot be immediately reinbursed by the client

advise the manager of the trust accounts department, the LS in writing of the situation and steps taken to recifty the error

commence the appropriate recovery action from the client if reinbursment is not recieved

Front 15

Money paid in accordance with a bill of costs anddisbursements rendered by the law practice to aclient which represents work done anddisbursements which have been incurred and paid. Do we need a reciept of trust money

Back 15

No. Section 246(4) states that it is not trust money.

Front 16

Money paid on account of barristers’ fees yet to beincurred. trust receipt?

Back 16

Yes, as the money is received in anticipation of thedisbursement.

Front 17

Money received by a law practice, reimbursingbarristers’ fees incurred by the practice which werepaid from the general account. Trust reciept?

Back 17

No, as it is a reimbursement. It may be prudent for the lawpractice to ensure that the payment to the barrister has beenpresented to the AADI statement.

Front 18

money paid on account of costs and stamp duty not yet paid by the law practice. Trust reciept?

Back 18

Yes, as the money is received in anticipation of thedisbursement. The money must be deposited into the generaltrust account or controlled money account belonging to personon whose behalf the law practice is holding the money.

Front 19

Money paid to the law practice by the principal’sfather, who is not a client of the law practice, for thepurpose of discharging the father’s debts which falldue while the father is overseas on three months’holiday. Trust reciept?

Back 19

No, as there is no underlying legal matter. The law practice mustensure that the money is not deposited into the general trustaccount as a practice is not permitted to mix trust money withother money.

Front 20

The following statement has been advanced by some legalpractitioners when asked about the failure to issue a bill tothe client, I have obtained a blanket authority at thecommencement of the matter which entitles me to transfermoney on account of work completed without rendering abill of costs. I have the client’s authorisation. Is thisconsidered a sufficient authorisation to transfer moneypursuant to Clause 88 of the Regulations?

Back 20

Clause 88 of the Regulations provides that a bill of costs or arequest for payment (see Question 1.9(a)) be issued and theclient authorises the transfer. The blanket authorisation is notconsidered sufficient as it does not refer to a finite sum which isto be transferred. It is considered that the authorisation needs tobe an informed authorisation, and it is difficult to understand howan authority to transfer money for costs and disbursements canbe informed if the amount of costs has not been disclosed to theclient giving the authority. Therefore a bill must be issued andspecific authorisation in relation to that bill is required.

Front 21

.

Back 21

.