Unclaimed Trust Money: A Solicitor’s Duties

Identify Whether the Balance is Unclaimed

Treat a residual balance as a question about an existing client-money liability before choosing an unclaimed-money route. Read the retainer, matter ledger, final bill and correspondence together. Establish when the money became payable and whether payment instructions remain outstanding.

Separate the cases that need different action:

• An identified recipient cannot be located despite recorded searches. Assess the applicable unclaimed-money procedure.
• Two people claim the same balance. Resolve the entitlement dispute through the appropriate process, which can include interpleader.
• A receipt was posted to the wrong matter. Investigate and correct the accounting record with supporting authority.
• A cheque remains unpresented. Establish its status before cancelling or replacing it, so the practice does not pay twice.
• The money remains held for an unfinished obligation. Establish whether it is payable before treating it as unclaimed.

For the governing account arrangement and payment authority, use the trust accounts guide. A quiet matter file alone proves neither that the money is payable nor that its owner is missing.

Reconcile the Money and Identify the Entitled Recipient

Reconcile the residual client liability to the original receipts and each authorised payment before searching for a recipient. Match ledger entries to bank records, bills and disbursement evidence. List outstanding cheques and other payment instruments separately from cleared debits.

Keep any unexplained difference as an open exception. A remittance entry must not conceal a shortfall or make an unsupported deduction appear authorised. Record the amount established by the documents and the amount still in question.

Identify the legal person entitled to receive that established amount. The payer, client and ultimate recipient can be different people. A bank account name does not establish authority to receive client money.

For a deceased client, establish the representative’s authority through the applicable estate documents before paying them. A relative’s knowledge of the matter or possession of an old email is insufficient by itself. For an entity, check its legal status and the authority of the person giving instructions.

Keep the holder’s task distinct from an estate practitioner’s asset search. Here, the practice already holds the money and must account for its disposition.

Record Reasonable Attempts to Locate the Owner

Build a search record that shows what the practice tried and what each step established. Start with lawful information already held in the matter file. Check later correspondence, changed contact instructions and returned communications.

Record the contact method, address used, attempt date and response. Retain delivery failures and returned letters. Where a response comes from a different person, verify their identity and authority before discussing confidential matter details or accepting payment instructions.

Use appropriate authorised sources to investigate a changed address, a death or a ceased entity. Limit searches to information relevant to locating the entitled recipient. Keep personal information within the authorised process instead of publishing a client’s details to invite claims.

Set a review point for unresolved searches and identify the responsible principal. The record must explain why the practice concludes that the owner cannot be located. A note saying only “old balance” leaves that conclusion unsupported.

Choose the Correct Jurisdictional Route

Select the law governing the practice’s holding of this money before applying a threshold or payment deadline. NSW and Victoria illustrate why there is no single national solicitor rule.

NSW Legal-Practice Money

Revenue NSW’s legal-practice guidance identifies section 14 of the Legal Profession Uniform Law Application Act 2014 as the specific route. A practice unable to locate the owner can retain the money in trust or pay it to the Treasurer. The general Unclaimed Money Act 1995 route does not apply to this category.

Reasonable owner-location efforts precede remittance. The legal-practice route does not depend on the general business amount or holding-period limits. Disputed ownership prevents use of this route.

Payment to the Treasurer ends the practice’s responsibility to return the money to its owner. Revenue NSW expressly preserves responsibility to another person with a claim. Record that distinction in the disposition decision instead of treating payment as a universal release.

Victorian Client-Money Balances

The Victorian Legal Services Board and Commissioner’s trust-account fact sheet directs practices holding qualifying unclaimed balances to the State Revenue Office. Apply the Unclaimed Money Act 2008 and the revenue process together.

The State Revenue Office lodgement guide describes money legally payable, unpaid for at least 12 months at its annual assessment point and grossing $20 or more. It also requires no reason to believe the owner wants continued holding. Amounts for the same owner can be combined to meet the threshold.

The annual register, return and payment are required steps for qualifying money. Use the guide’s official calendar cut-offs to determine the relevant cycle. A balance’s twelfth month alone does not set the lodgement deadline.

Permitted reasonable expenses are limited to bank fees, postage and stationery. Staff wages and register-preparation time are excluded. Show gross entitlement, any supported permitted expense and net payment separately.

These are jurisdiction-specific routes. Apply another state or territory’s own legal-practice rules before moving a balance held under that regime.

Make the Authorised Payment and Preserve the Claim Trail

Complete the disposition in an order that connects the decision to the actual bank movement:

1. Record the governing route, entitlement conclusion and principal’s payment approval. Attach the reconciliation and owner-search record.
2. Prepare the required owner information and return. Include the matter reference, nature of the funds and the recipient details supported by the file.
3. Obtain payment instructions directly from the official revenue channel. Independently verify the destination before an authorised signatory moves client money.
4. Retain the submission reference and acknowledgement. Match the cleared bank debit to the return and record the disposition in the client ledger.
5. Reconcile the bank, client ledger and remittance record. Keep any continuing liability or unresolved entitlement issue separately visible.

Consider this fictional balance. A practice receives $4,800 for a matter and makes supported, authorised payments of $3,100 in costs and $450 in disbursements. The remaining liability is $1,250: $4,800 minus $3,100 minus $450. Assume the governing route permits remittance and no remittance expense is deducted.

The approved return must identify $1,250, and the bank must show a cleared $1,250 debit to the authorised destination. The client ledger then records the statutory disposition with its acknowledgement reference. A zero ledger balance records the accounting result. The governing law determines the extent of discharge, including NSW’s preserved responsibility to other claimants.

Keep the receipt, deductions, search evidence, decision and acknowledgement together so a later enquiry can be traced to the correct authority. Victorian guidance requires the register and supporting records for at least five years after lodgement. Preserve any longer record period required for the practice’s trust records.

If payment fails, the authority returns it or a new ownership dispute emerges, reopen the exception record. Reconcile the returned money and establish the next authorised step. Leave the file showing where the money is held and who must resolve it before another payment.