Thursday, September 24, 2009

Is a trust account authority required to transfer a person's trust money to another trust account?

Ss. 249(1) of the Legal Profession Act 2007 provides, inter alia:

"A law practice must -
(a) hold trust money ............................. exclusively for the person on whose behalf it is received; and
(b) disburse the trust money only under a direction given by the person.

There is no definition of "disburse" for the purposes of S. 249.

The ordinary meaning of "disburse" is "pay out; expend".

The transfer of trust money from one ADI trust account maintained by a law practice to another ADI trust account maintained by that same law practice is not a payment out of the client's trust money. The law practice continues to hold the money for the client.

Accordingly, there is no requirement for a law practice to obtain an authority, from the person on whose behalf trust money is held, in order to transfer that person's trust money to another ADI trust account maintained by the law practice.

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