Trust Account
Key Takeaway
A separate bank account maintained by an attorney to hold client funds, settlement proceeds, and other money belonging to clients or third parties. Trust accounts must be kept completely separate from the attorney's operating funds.
Definition
A separate bank account maintained by an attorney to hold client funds, settlement proceeds, and other money belonging to clients or third parties. Trust accounts must be kept completely separate from the attorney's operating funds. Commingling or misappropriating trust funds is among the most serious ethical violations and frequently leads to disbarment.
Why This Matters for Law Firms
Regulatory requirements vary by state and are evolving rapidly. Law firms must stay current with these terms to maintain compliance with bar association rules, state insurance regulations, and client disclosure obligations. Non-compliance can result in disciplinary action, fines, or uninsured exposure.
Example Usage in Context
An attorney completing their annual bar registration might see this referenced: "The state bar asks about trust account status. Make sure our firm's records are current and our response is accurate."
Related terms
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