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Changing Trust (or Client) Bank Accounts

NOTE:  In the UK, trust accounts are called client accounts. Throughout this article, any reference to a trust account also means a client account.

There may be times when your firm needs to move from one trust bank account to another—for example, if you're switching banking providers or consolidating accounts. Because trust funds are held on behalf of clients and tracked on a matter-by-matter basis, moving to a new trust bank account isn't as simple as updating a bank detail—the funds held for each matter need to be formally moved across, matter by matter, so your records stay accurate and compliant.

This article walks you through the process of setting up a new trust bank account and transferring matter balances across from the old account.

Moving trust funds between bank accounts affects every matter with a balance in the old account. Before you begin, it's a good idea to:

  • Confirm with your bank that the new account is open and ready to receive funds.
  • Plan for a cut-off date/time so you know exactly which transactions belong to the old account versus the new one.
  • Ensure you have someone at your firm that can unprotect trust funds for those matters with protected funds. (See Unprotecting any Protected Funds (below).)

There are five parts to changing trust accounts:

 

Part 1: Setting Up the New Trust Bank Account

The first step in changing bank accounts is setting up your new account. This process is the same for any new trust bank account you set up. 

 

To set up a new bank account:

  1. Follow the instructions outlined in Managing Trust (or Client) Bank Accounts to create a new bank account.
  2. Note the following:
    • Select an active GL Account from your Accounts List or create a new one, if necessary.
    • For the bank's Account Type, choose Current Account, Investment Account, Controlled Account, or Statutory Account, depending on your jurisdiction.
    • Set the Status to Open. 
    • Specify your new banking provider as the Bank contact record. (See Creating a Contact for help creating the contact, if needed.)
    • Configure your Document templates, Email templates, and Statement settings. 

Note: Your admin may also need to adjust workflow steps/tasks as needed.  

 

Part 2: Unprotecting any Protected Funds

If your firm allows trust funds to be protected, any protected balances must be unprotected before they can be moved. This must be done on a matter-by-matter basis.

Note: To more quickly identify which matters you'll need to adjust, go to Trust > Matter Trust Accounts > Matter Trust accounts list. This list displays all your matters with trust accounts and includes a column for Protected Funds. You can use the Filter option to filter the list to show just those matters with actual funds. 

 

To unprotect funds:

  1. In Practice Management, view the matter with protected funds. (See Editing a Contact for help.)
  2. Click the Trust account menu icon. The Trust page appears.
  3. Click Protected funds on the left side of the page.
  4. Select the relevant Trust account. The list of protected funds is updated to show what's protected.

  5. Click the edit icon next to the protected fund you want to change.

    The Edit Protected Fund window is displayed.

  6. Click Unprotect all. This moves the funds back into the matter's available balance.
  7. Update the Details field to note why the fund was unprotected.
  8. Click Unprotect funds to save the change.

Repeat this for every matter with protected funds in the old account before moving on to Part 3: Identifying the Matter Balances to Move.

Note: See Designating Trust (or Client) Funds as 'Protected' to learn more about protected funds.

 

Part 3: Identifying the Matter Balances to Move

You can use the Trust Account Trial Balance Report to get an accurate, reconciled list of matter balances held in the old bank account.

 

To do this:

  1. In Practice Management, go to Reports > Trust Reports > Reports List.
  2. In the General section, select Trust Account Trial Balance. The Trust Account Trial Balance report page is displayed. 
  3. Enter the Period Ending date (or your cut-off date).
  4. Click Trust Account and select the old bank account.
  5. Run the report. It lists each matter's balance as at that date, alongside the reconciled cashbook value.

 

A note about uncleared items:

Before moving balances, check for any uncleared items against the old account — these are transactions that have been entered in Actionstep but haven't yet cleared at the bank, such as:

  • Checks/Cheques that have been issued but not yet presented/cleared.
  • Receipts that have been recorded but haven't yet cleared into the bank account.

Compare the Trust Trial Balance Report to your bank statement/reconciliation to identify these. You may want to hold off moving a matter's balance (or hold back the uncleared amount) until those items clear, to avoid the old account going negative once they do.

 

Part 4: Move Each Matter's Balance to the New Account

For each matter, once you know the correct amount to move (balance minus any uncleared items you're holding back):

  1. Post a debit (payment) on the matter from the old trust account for the amount being moved. This can be done as a trust payment or a trust transfer, depending on how your firm records inter-account movements.
  2. Post a matching receipt on the same matter into the new trust bank account, for the same amount.

Doing this on a matter-by-matter basis keeps each client's ledger accurate and auditable since the money is shown as leaving the old account and arriving in the new one under the correct matter.

If you have a large number of matters to move, you can bulk process trust payments and receipts:

  • Use the bulk import specifications under Admin > Trust accounting to upload a batch of payments or receipts using a CSV.
  • Alternatively, use the bulk payment/receipt options available from the Trust menu to process multiple transactions in one pass.

This is typically much faster than processing each matter's transfer individually, especially when you have many matters to move.

 

Part 5: Confirming the Transfer

Once all matters have been moved, you can confirm the success of the transfer.

 

To do this:

  1. Re-run the Trust / Client Account Trial Balance Report for the old account. It should now show a zero (or expected residual, if you held back uncleared items) balance across all matters.
  2. Run the same report (Trust / Client Account Trial Balance) for the new account to confirm the balances have landed correctly.
  3. Once any previously uncleared items have cleared at the bank, process the remaining balances for those matters using the same debit/receipt process in Part 4.
  4. Once the old account is fully cleared and no longer required, an admin can set its Status to Closed in Admin > Trust accounting.

 

Additional Resources:

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