Opening a Trust Account
Choosing a Financial Institution
You may open a trust account in any financial institution legally entitled to carry on business in New Brunswick. This includes a bank that is regulated by the Bank Act (Canada), trust or loan company, credit union or a caisse populaire or other financial institution as defined in the Rules.
You must make it clear to the financial institution that you are opening a trust account for your law firm and insist on certain conditions. The account must be in your name, must have the words ‘in trust’ included in its title, and must bear interest payable to the New Brunswick Law Foundation (see below under Interest on Trust Accounts for more information). You must also instruct the financial institution not to withdraw any bank fees from this account. Only trust money may pass through this account. Fees such as cheque order fees, or NSF charges for a returned client cheque must be taken from your general account and never from trust. In addition, the financial institution must be able to return all cashed trust account cheques to you (Paragraph 2(1) (j) of the Rules).
If the financial institution is not able to meet these conditions, you will not be able to keep your trust account at that financial institution. Some financial institutions now store cancelled cheques at their data centre. This does not meet the requirements of the Rules. You must instruct the institution to return cancelled cheques, or an acceptable electronic version of the front and back of the cheque to you.
Make sure to open your trust account in advance of when you expect to use it for the first time. It is not as simple as opening a bank account and issuing a trust cheque that same day. You must set up your records and client trust ledgers before you accept any trust money. See Appendix ‘B’ for a New Firm Checklist for Setting Up Trust Accounting Systems.
Notifying the Law Society
A lawyer who opens a trust account is required to give written notice to the Executive Director of the Law Society of New Brunswick. This notice is simply done by sending a letter to the Executive Director and must include the following information:
the date the account is opened;
the name on the account;
the name of the financial institution; and
the account number.
Along with the notice that you have opened a trust account, you must also obtain and file a letter signed by an accountant in which the accountant certifies that you have a trust accounting system in place that will allow you to comply with the Rules and that you have been instructed in the procedure to be followed in order to operate the trust accounting system. See subsections 6(1) and 6(2) of the Rules.
You may use the Notice of Opening or Closing a Trust Account form to notify the Executive Director that you have opened a trust account.