How do you close a law firm trust account?
Law firms close trust accounts for a number of reasons: switching banks, transferring to new partners or closing down a practice are just a few. Whatever the reason, there are certain steps that should be completed to stay in compliance during the process.
Fully reconcile the trust account
All funds in the account should be tied to a specific matter and client. If you haven’t reconciled your books in a while (although you should be doing it every month for trust accounting best practices and certain bar association compliance), you may need to backtrack to find out where any errors were made if the numbers don’t match up.
Make sure closing costs for the account are covered
You’ll want to reach out to the bank to make sure there are no costs associated with closing out your account. Don’t ever use client funds to cover these fees.
If you’re simply opening up another trust account at another bank, these funds can then be transferred to the appropriate account. If you’re closing down your practice completely, you’ll need to conduct a few more steps.
Send any final bills and then return funds to your clients
Make sure clients are aware of their final amount owed and that they have time to pay their invoices. After that period, funds in the account should be dispersed to the respective clients.
Deal with unclaimed funds
If funds go unclaimed, you should follow your state’s law regarding unclaimed funds. The entity is typically the state’s bar foundation, where the funds are then used for legal aid.
From here you should make sure again that all funds have been accounted for and the account balance is cleared before closing down the account.