Trust Accounts
OPENING A TRUST ACCOUNT?
Before you open a trust account:
- You must be approved by the Law Society (Rule 114)
- Direct your financial institution to remit the interest earned on the trust account to the Law Foundation of the Northwest Territories.
- Inform the Law Society in writing of the location and account number of your trust account.
- Review the relevant Rules regarding trust accounts and the designation of a Responsible Lawyer.
Click here to download a template Letter of Direction to remit interest to the Law Foundation of the Northwest Territories.
ANTI-MONEY LAUNDERING
Lawyers must follow anti-money laundering (AML) regulations by verifying client identity, ensuring trust funds are tied to legitimate legal services, and maintaining accurate records. They must also comply with law society audits and reporting requirements to prevent misuse for illicit activities.
Click here for more information
REQUIREMENTS FOR NEW TRUST ACCOUNTS
Within four months of obtaining approval to operate a trust account, all new firms and sole practitioners must, along with your accountant, submit a Law Firm Start Up Report.
REQUIREMENTS FOR EXISTING TRUST ACCOUNTS
Annual Reports
Pursuant to Section 48 of the Legal Profession Act members are required to provide annual reports to the Law Society of the Northwest Territories by September 1.
Scenario 1
- If you are a sole practitioner that operates a trust account in the Northwest Territories or
- If you are the Responsible Lawyer of a firm that operates a trust account in the Northwest Territories or
- If you are a sole practitioner that is located outside of the Northwest Territories but are insured by the Law Society of the Northwest Territories
You are required to complete and file the following with the Law Society of the Northwest Territories:
PROCESS – Accountant’s Report
- The Law Society of the Northwest Territories (“LSNT”) provides the package to Law Firms subject to annual reporting requirements.
- Law Firm and Accountant complete the Engagement Letter.
- Accountant completes the report and provides the Report Letter and Report Findings to the LSNT.
Scenario 2
If you are a sole practitioner that is located in the Northwest Territories, and you do not operate a trust account, or you are the Responsible Lawyer of a firm that is located in the Northwest Territories that does not operate a trust account
You are required to complete and file the following with the Law Society of the Northwest Territories:
A reminder that all law firms and sole practitioners located in the Northwest Territories or insured under the Law Society of the Northwest Territories must designate a Responsible Lawyer. If you have not designated a Responsible Lawyer, you may do so through your member portal.
Click here to view a guide to help you determine what reporting is required.
New and Expanded Trust Reporting Rules (CRA)
To view the new requirements, click here.
Trust Account Shortages
You must report a trust shortage to the Law Society by completing a Trust Account Shortages Form if:
a) a shortage exists that cannot be attributed to a client file and is greater than $50.00 or not corrected in 30 days, or
b) a shortage exists on a client file and
i) the law firm does not correct the deficiency within 7 days of the time the shortage arose, and/or
ii) the deficiency is an amount greater than $2,500, regardless of when the deficiency is corrected.
CLOSING A TRUST ACCOUNT
If you are closing your practice in the Northwest Territories, you are required to provide the Law Society with a final Law Firm Self-Report and Accountant’s Report that are completed by you and your accountant. The reports must cover the period up to the last date you practiced law.
Every active member is required to submit a Cessation of Practice plan at least 14-days prior to the anticipated date. For more information about retiring from private practice, click here.
