Trust account form LF1
The trust account form may be used by lawyers when setting up their general trust accounts.
When I open a general trust account, how do I instruct the financial institution to remit the interest to the Law Foundation?
You do not instruct the financial institution because it is their duty to remit. When you open a general trust account (including a Service Nova Scotia trust account), you may complete two (2) copies of Form LF 1, which is a letter of direction to banks, trust and loan companies to pay and remit interest on your account to the Law Foundation. Alternatively, you may draft your own letter of direction. The letter of direction simply clarifies the financial institution’s duty to remit.
Please send one copy of the form that you choose to the Law Foundation by email [email protected] or by regular mail to the Law Foundation of Nova Scotia, Suite 1305, Cogswell Tower, 2000 Barrington Street, Halifax, NS B3J 3K1
Must I notify anyone else regarding the opening of a general trust account?
Yes. According to Regulations made pursuant to the Legal Profession Act. 2004, c. 28, Part 4.10 Operating a Trust Account, the firm is required to have prior approval of the Nova Scotia Barristers’ Society before opening a general trust account.
Must I complete Income Tax Forms with respect to the interest on my general trust account?
No. Since the interest becomes the property of the Law Foundation, the financial institutions prepare Income Tax Form T5 in the name of the Foundation, and they remit the form to the Law Foundation offices.
Must I notify the Law Foundation if I open a specific trust account for a single client?
No. In this case, the interest goes into the account for the client’s benefit pursuant to Subsection 30 (5) of the Legal Profession Act. 2004, c. 28, s. 1.
Must I notify anyone when I close a general trust account?
Yes. You are required to notify the Law Foundation and the Nova Scotia Barristers’ Society.
Firms must now confirm that appropriate arrangements, in writing, have been made with the financial institution to comply with the requirements of Section 30 of the Legal Profession Act. 2004, c. 28, s. 1 and Regulations made pursuant to the Legal Profession Act, S.N.S 2004, c.28 proclaimed May 31, 2005 amended to September 27, 2019. Please see the legislation for the full version, but here are excerpts:
Approval to operate a trust account
4.10.1 After January 1, 2018, a practising lawyer or law firm that does not operate a general trust account, may not accept trust money or trust property without approval to operate a general trust account pursuant to subregulation 4.10.4.
Requirements for operating a trust account
4.10.3 Prior to operating a general trust account, a lawyer or law firm through its Designated Lawyer, must:
(a) successfully complete a Trust Account Assessment as required by subregulation 4.10.2.1;
(b) provide a certificate in the prescribed form from a licensed professional accountant, confirming that the practicing lawyer or law firm has in place a trust accounting system that will enable compliance with Part 10 of the Regulations;
(c) confirm that appropriate arrangements, in writing, have been made with the financial institution to comply with the requirements of Section 30 of the Act;
(d) in the case of a lawyer, hold a practicing certificate; and
(e) meet such other requirements as may be prescribed by Council.
Executive Director must approve
4.10.4 When the requirements of subregulation 4.10.3 have been met, the Executive Director must approve a practicing lawyer or law firm to operate a general trust account.