Client Trust Accounting for Arizona Attorneys

This information is intended as a tool to help Arizona attorneys fulfill his or her ethical obligations to clients whose money and other properties the attorney holds in trust.  Even if you never intend to handle cases that will require you to hold money or other properties for clients, it’s imperative that you understand these obligations.  Learn more. Also see Rule 43 and Rule 44.

Trust Account Tips

These quick tips may be a good refresher or a simple way to deepen your understanding of trust account obligations.

Checklist for Disbursing Against Uncollected Funds

Another helpful tool in managing your trust account is using a checklist for disbursing against uncollected funds.

IOLTA Enrollment Form
An online IOLTA enrollment form and instructions are available on the Arizona Foundation for Legal Services & Education Web site. They are also accessible here.

Approved IOLTA Account Financial Institutions

Interest from IOLTA (Interest On Lawyers Trust Accounts) in Arizona benefits programs of the Arizona Foundation for Legal Services and Education, which funds legal services for the poor and law related education for Arizona's school children.

Trust Account Tips

When depositing funds to the trust account:

1. Check to make sure that the deposit slip that you’re using is for the correct account.

2. Ledger the deposit on the corresponding individual client ledger(s).

3. Ledger the deposit on the general trust account ledger/check register.

4. Complete the duplicate deposit slip, identifying the corresponding client(s) whose funds are involved. If not using a duplicate deposit slip, complete a deposit log or some other documentation to identify the date of deposit, the amount and the corresponding client.

5. Make the deposit and retain the bank receipt. Check with the teller to determine if a deposit hold is going to be placed and, if so, for how long.

When disbursing funds from the trust account:

1. Check the individual client ledger(s) for whom you are drawing the disbursement for to ensure that the trust account has sufficient balance to cover the disbursement.

2. Confirm that the funds that you’re disbursing against are collected in the trust account?

Did you verify that the offsetting funds have been credited to the trust account?

Did you verify with your bank that any deposit holds have been released?

Did you check with the bank that the deposited check is drawn on to ensure that it has paid the check?

3. If the funds are uncollected, follow "Checklist for Disbursing Against Uncollected Funds."

4. Ledger the disbursement on the individual client ledger(s). Be sure to total the transaction and create a new ending balance on the client ledger.

5. Ledger the disbursement on the general trust account ledger/check register. Again, be sure to total the transaction and create a new ending balance on the register.

6. Draw the check and identify the corresponding client(s) in the memo portion of the check.

7. If conducting a wire or electronic transfer, ensure that the transaction is clearly identified on the corresponding client ledger(s) and on the trust account general ledger/check register. Double-check account numbers for accuracy!

For more information about Trust accounts, contact the Bar's Law Office management Assistance program at (602) 340-7313. Remember, this is simply a tool to assist the lawyer in the proper trust account usage, however, lawyers should ALWAYS refer to Rules 42, ER1.15, 43 and 44, Ariz.R.S.Ct, for complete instruction when conducting trust account transactions.

Checklist for Disbursing Against Uncollected Funds

Another helpful tool in managing your trust account is this checklist for disbursing against uncollected funds.

A lawyer may disburse against uncollected funds if the deposit is a limited-risk uncollected deposit, the lawyer has personal funds available to cover the deposit in the event the deposit is returned or fails for any reason, and such correction can occur within 3 business days of the lawyer learning of the failed deposit.

1. Does the deposit meet the criteria of a "limited-risk uncollected deposit?"  Is it a:

Certified check

Cashier’s check

Bank check

Official check

Treasurer’s check

Money order

Other instrument in which the payor is a bank, savings and loan association, or credit union

Check issued by United States or Arizona or any agency or political subdivision of the state

Check or draft issued by insurance company, title insurance company, or a licensed title insurance agency authorized to do business in this state.

2.  Do I have personal funds available to cover the deposit if, for any reason, the limited-risk deposit is returned against the trust account?

3.  Will the personal funds be available to be deposited into the trust account within three (3) business days of learning of the deposit failure?

4. Is my bank going to place a hold on the deposit? If so, when will the deposit hold be released?

This is simply a tool to assist the lawyer in the proper trust account usage, however, the lawyer should ALWAYS refer to Rules 42, ER1.15, 43 and 44, Ariz.R.S.Ct, for complete instruction when conducting trust account transactions.